NIIT Learning Systems Ltd. (NSE: NIITMTS) Q3 2026 Earnings Call dated Jan. 28, 2026
Corporate Participants:
Vijay Thadani — Managing Director and Vice chairman
Sapnesh Lalla — Executive Director and Chief Executive Officer
Sanjay Mal — Chief Financial Officer
Kapil Saurabh — Vice President – Investor Relations
Analysts:
Bharat Gulati — Analyst
Ganesh Shetty — Analyst
Rajakumar Vaidyanathan — Analyst
Gaurav Nigam — Analyst
Yohan Khinvasara — Analyst
Manav Medewala — Analyst
Deepak — Analyst
Rahul Jain — Analyst
Pranaya Jain — Analyst
Trilok Joshi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to NIIT Learning Systems Limited Q3FY26 earnings conference call. 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 concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Tadani, Vice Chairman and Co Founder. Thank you. And over to you Mr. Tarani.
Vijay Thadani — Managing Director and Vice chairman
Thank you. Good afternoon everyone. Thank you for joining the NIT Learning Systems Limited Quarter 3 FY26 earnings call. And thank you very much for your continued interest. We know you had other commitments today but you decided to give your time to us. We are grateful to you. Quarter three is an interesting quarter and we’ll begin with some prepared remarks and key business updates including the inorganic activity and then we’ll follow it with Q and A. Just as a matter of record, before we begin, some comments that we may be making may be forward looking and subject to risks and uncertainties and actual results may differ materially.
We want you to note that the agenda is to complete is to discuss the quarter three FY26 results. Second, on our progress on our AI first, strategy and AI enabled revenues. Third, an update on the inorganic activity which we completed during the quarter. Fourth, that discuss the outlook for the rest of the year and then the rest of the time. For question and answers, I have with me the Chairman of the company, Mr. Arif Kawar, the CEO of the company, Mr. Sapnesh Lala, the CFO of the company, Mr. Sanjay Mall, Mr. Kapil Saurabh who heads the M and A and Investor relations as well as our other senior colleagues from Accounts Finance accounts and other governance functions.
I’ll now hand you over to Sapnesh Lala for his opening comments.
Sapnesh Lalla — Executive Director and Chief Executive Officer
Thanks Vijay and good afternoon to all of you and thank you for joining the call. In my prepared comments, I will review our performance in Q3 and share our view on the path ahead. Let me first set the context. The global environment as you might be aware, remains uncertain. Client decisions, decision making cycles are still elongated and discretionary spending continues to be closely scrutinized. At the same time, we continue to see sustained demand for outsourcing and operating model transformation as clients focus on cost, agility and productivity. We continue to see wallet share expansion across a wide range of our clients.
Though the overall environment continues to remain dynamic. AI is continuing its rapid march to becoming mainstream with significant investments by early movers across different segments. This represents a once in a lifetime opportunity for us. As we have often stated in this context, we delivered another quarter of strong execution. In line with our guidance, the revenue for the quarter was 4,997 million. INR was up 5% quarter on quarter and 19% year on year. In constant currency terms, the revenue grew 2.5% quarter on quarter and 11% year on year. Excluding the real estate contract that came to an end as of June 30, 2025, the growth was 9% quarter on quarter and 28% year on year.
The organic revenue growth was 14% year on year. Growth was driven by customer ramp ups and wallet share expansion along with stronger contribution from mst. As we move past the seasonally soft vacation period in Europe, robust growth underscores the strength of our go to market engine as well as the trust and faith our clients have in our delivery and execution capability especially for their critical needs. Importantly, our growth continues to be broad based across services supported by a healthy flow of new wins as well as renewals. Our ability to expand wallet share with existing clients remains a key growth lever supported by deepening relationships and demonstrated delivery excellence.
While spend from existing clients improved modestly, the recovery remains gradual and overall spend is still below pre slowdown levels. We remain cautiously optimistic on the environment and the business impact that we can cause. Notably, the business continues to outperform its peers demonstrating resilience through industry leading growth and profitability. Our customer momentum and revenue visibility remain strong. Within the quarter we signed four new MTS clients, one in Life sciences, two across bfsi, one in the energy sector. We also completed four renewals and we delivered one significant scope expansion. As a result, our MTS customer tally increased to 107 at the end of the quarter.
The revenue visibility improved to 415 million up from 409 million previous quarter and US$391 million same period last year. Our profitability remained resilient with margins in the guided range. The EBITDA for the quarter was 1,038 million. INR was up 10% year on year with EBITDA margin at 20.8% which was within the range that we guided. Margins benefited from improved utilization as well as MST’s stronger contribution. This was partially offset by seasonality in the St. Charles business and absence of the real estate contract contribution from the real estate contract this quarter. We remain disciplined on delivery and productivity while continuing targeted investments to support our growth across improvements in capability or investments in capability building as well as go to market.
We made significant progress in building our AI capability. We now have a pole position in the LND market as acknowledged by our customers as well as industry analysts and IIT has always been at the cutting edge of technology and learning. AI first strategy and learning has evolved into a considerable point of differentiation for us. We have gone live with a number of enterprise deployments of our AI solutions. Notably, the total AI enabled revenue grew to about 11% of the business this quarter. Spending another couple of minutes on financials, depreciation and amortization was at 194 million in our net other income was 104 million compared to 26 million last year and negative 89 million in the previous quarter.
It’s important to note that the key components included 87 million of treasury income, the net exceptional gains of 109 million comprising of a gain of 298 million due to fair value adjustment, the future acquisition liability with respect to St Charles transaction expenses of INR 54 million on account of acquisition of SweetRush one time impact due to increase in employee liabilities due to the new wage code of 135 million. The net other expense of 92 million and this included forex loss of 61 million. It also included interest cost of 23 million INR. Tax was at 205 million.
The effective tax rate was 22% versus 32% last quarter primarily due to no tax on the gain from adjustment and future acquisition liability. The PAT was at 743 million. EPS was was at 5 rupees and 42%. The balance sheet and cash flow metrics remain strong. The DSOs stood at 74 days as compared to 66 days last quarter and 62 days last year reflecting business mix, seasonality and exchange rate movement. Cash and cash equivalents were at 9,046 million. Capex quarter for the quarter was 126 million INR versus 99 million in last quarter on account of ongoing investments in AI as well as some of the infrastructure refresh that was accomplished during last quarter.
Operating Cash flow was 1038 million INR as compared to 777 million INR in the previous quarter with free cash flow of Rupees 920 million INR for Q3. Net cash was at 6927 million INR was up from 5917 million INR last quarter. Our headcount was at 2,433 at the end of quarter three up 77 year on year and down 38 quarter on quarter let me spend a minute on the overall market. Like I pointed out in my opening comments, market volatility continues to heighten the emphasis on cost optimization, prompting increased client engagements on large scale cost takeout as well as transformation initiatives.
Although the decision cycles are elongated, AI and its profound impact on the practice of L and D is real and starting to become visible. Early adopters are starting to take advantage of AI with our assistance. We think this has the potential to be a multi year growth opportunity, especially for an IIT Learning Systems limited. We believe NLSL is well positioned to capture a disproportionate share of these opportunities, underpinned by continued investments in AI consulting and advisory services and sales and marketing and go to market activities. A strong brand as a trusted and reliable market leader as well as.
An. Organization that its clients trust with some of the most critical LND tasks. Our deal pipeline continues to remain robust with active opportunities across large outsourcing deals spanning technology, automotive, life sciences, BFSI and other sectors. We would however like to point out that due to the significant market uncertainty that decision making cycles are starting to stretch beyond what we would consider typical. We continue to see accelerating structural transformation across industries we serve, driven by digitization, decarbonization, biopharma innovation and AI. AI being mother of all key innovations at this time, many organizations are actively restructuring to improve cost agility, fueling increased demand for outsourcing.
This environment is triggering an uptick in outsourcing activity and NLSL is uniquely positioned to capitalize especially as select competitors SIS strategic or operational distractions. A minute on the investments we’ve made this past quarter and continue to make going forward. NLSL continues to make disproportionate investments in new capabilities and go to market strength. Generative AI is becoming increasingly central in client discussions. More broader adoption at enterprise scale for LND remains cautious. Nonetheless, we are rapidly expanding our use of AI across multiple work streams. Where deployed, we are becoming more ambitious in delivering measurable learning outcomes for clients while also realizing notable efficiency gains.
We, as mentioned earlier, continue to invest disproportionately in our go to market capability as you saw recently with the acquisition of MSC where we invested significantly to implement go to market capability in the dark region. We announced on January 9th and IIT Learning Systems acquired 100% of SweetRush, which is an award winning provider of human centered AI enabled learning experiences, strategic training interventions, XR immersive learning programs, certification programs and talent solutions for Fortune 1000 corporations along with professional associations and not for profit organizations founded in 2001, SweetRush headquartered in San Francisco, California. The purchase price for this acquisition was up to US$26 million including EBITDA based earnouts over a five year period, creating strong alignment with outcomes expected from the business.
This move moves us up the value chain. It strengthens our proposition in outcomes, LED performance, critical Learning and complements NIIT’s scale Managed services Managed learning services engine high quality client base with high stickiness, long standing enterprise relationships, strong repeat business and certification led revenue streams add attractive adjacencies beyond our current mix. The company has annualized revenue of approximately 22 million with double digit margin. Q3 is typically the strongest quarter for the company contributing about 35 to 38% of the revenue. Chaos Energy Roadmap and opportunity to convert project LED work into longer duration managed engagements across and cross sell of NIIT’s global MLS platform into SweetRush’s client base makes the acquisition attractive to NIIT clients as well as its contribution to NIIT’s bottom line.
Margin, like I pointed out, is early double digits with near term expected improvements through delivery mix optimization and operating leverage. We think that the company will become margin accretive over the next six to eight quarters. It is EPS attractive starting at Fly27 the leadership continuity and integration plans to preserve Sweet Rush’s creative edge has been preserved and integration plans to bring both the companies together so that they can leverage each other’s key capabilities has been implemented. A minute on our guidance for Q4 we expect revenues to grow, revenue growth to be 10 to 12% quarter on quarter or 25 to 26% year on year in constant currency terms.
The growth is aided by robust contract pipeline, continued ramp up in new clients and impact of acquisition of Sweetrush for the full year. FY26 we expect revenue growth to be 14.5 to 15% constant currency terms. Margins are expected to be in the 20 to 21% range for the full year and for Q4 with that I’ll hand back the meeting to Vijay for any comments and then for Q and.
Vijay Thadani — Managing Director and Vice chairman
A no, I think Sapnesh, you covered it all. We’ll open it up for Q and A so that everybody gets time to ask their questions.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Yeah, Anyone who wishes to ask a question may press Star and one on your touchstone 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, we will wait for a Moment. While the question queue assembles, the first question comes on the line of Bharat Gulati with Dalal and Pruacha Stockbroking. Please go ahead.
Bharat Gulati
Yeah, hi, sir. Thank you for the opportunity. I just want to understand, are EBITDA margins going forward? Given that sweetrush is at a lower EBITDA than our traditional business, what would the outlook be for, let’s say, the next one year? If you can throw some light on. That. In the 20% range. Would that mean that we would see EBITDA margins coming up for sweetrush immediately as the quarters go on by?
Sapnesh Lalla
No. Like I pointed out, it would take about six to eight quarters for Sweet Rush’s margins to become a creative. We would have every endeavor to get them to become a creative sooner. However, through other initiatives, we plan to ensure that the margins stay above the threshold.
Bharat Gulati
Okay, got it. And so on our cross sell opportunity that has come with both the acquisitions, the sweetrush as well as the MST one, how do we see that transpiring to our traditional revenue growth? How much will that aid our organic growth in terms of MST clients, MTS clients, and how would that look like?
Sapnesh Lalla
We expect that both the acquisitions will result into acceleration in managed learning services clients. It’s still a little early to provide concrete information, but we think that each year we might be able to add one additional MTS client or convert one MTS client out of the set of project clients that SweetRush and MST have.
Bharat Gulati
How would it work on the other side in terms of how sweetrush and how would we leverage their services? And in turn, how would we see growth in those two companies then come in leveraging our client base? So can we quantify that in certain ways? How much will that aid our revenues going forward? And if you can put a number to it, or maybe give a broad understanding. Hello.
Sapnesh Lalla
Set up workshops where NIIT is participating in workshops with SweetRush clients and SweetRush is participating in workshops with NIT clients such that we are able to introduce each other’s services to our key clients.
Bharat Gulati
Okay. Okay, got it. So just one last question, sir. Barring our RICOH contract fall off this quarter, what would have been growth for us? What kind of growth would have we seen if we adjust that?
Sapnesh Lalla
Like I pointed out, both without the RICOH contact would have been 28% year on year and 9% quarter on quarter. Okay. Yeah.
Bharat Gulati
Thank you, sir. Thank you for that. That’s it.
Vijay Thadani
And a substantial improvement in margin.
operator
Thank you. Next question comes from the line of Ganesh Shetty. Yep. Next question comes from the line of Ganesh Shetty and Induji Master. Please go ahead.
Ganesh Shetty
So congratulations for a strong quarter in a traditionally weak quarter and macro challenges. So my first question is regarding embracing of AI related services by our clients and also our convincing them new clients to have LLD activities in MTs area. So can you please throw some light on this, sir?
Sapnesh Lalla
See like I pointed out, AI is going to be the game changer for learning and development. We’ve been investing in AI over the last three years and we are starting to see AI take root at least across the key early adopters. In our clients. We have a handful of a handful of significant enterprise great implementations and we think that these implementations will only accelerate over a period of time.
Ganesh Shetty
So my second question is regarding life science segment. As life science segment is one of the major consumption of AI related LED services, is there any early indication that our AI based learning systems are providing a synergy for a lot of life science companies? Can you throw some light on this?
Sapnesh Lalla
You are right, they are early adopters. In fact, one of our large life sciences customers has been an early adopter and they’ve seen benefits and they are moving from to enterprise level adoption as we speak.
Ganesh Shetty
Thank you very much sir for all the answers and all the best for the future. Thank you.
Vijay Thadani
Thank you.
operator
Thank you. Next question comes to the line of Rajkumar Vidyanathan with RK Invest. Please go ahead.
Rajakumar Vaidyanathan
Yeah, can you hear me? Yes. Yeah, thank you for the opportunity. Actually I have three questions so I want to understand. You know, you’re saying that you’re already deploying these AI services and they are. Seeing good traction so broadly. If I split this AI training generally it will come under three categories, right? One is training on, you know, random data. Random. I was hearing an echo. Okay, can you hear me? Can you hear me now?
Sapnesh Lalla
Yes, please go ahead.
Rajakumar Vaidyanathan
So in short, basically training, there is fine tuning and there is inference, right? Do you actually train corporates and you know, customers, enterprises on all the three categories? And if you do, what would be nice is if you give some examples. Of how that has played out, that will be nice to hear.
Sapnesh Lalla
I think the question was focused on do we do a lot of training for our clients on how to use AI? I think the majority of work for our clients in using AI for delivery of training rather than delivering training on AI. We have a few clients for whom we deliver training that teaches their associates on how to use AI. But that’s minority of what we do. The majority of what we do is build AI enabled learning solutions for our clients such that AI is helping run the learning and development for a client rather than teaching them on how to use AI.
Okay, so is it possible to give an example? Sure. One of the areas where we use a lot of AI is in personalizing learning experiences, building simulations of real life scenarios that are delivered through AI impersonators or avatars and provide coaching based off how a person did in that simulation. These simulations could be of scenarios with respect to sales, customer service, more complex scenarios such as financial reporting, consulting, and so on, so forth. So we use AI to help simulate use cases that our clients often confront, help them confront those, use cases as training, use cases in a safe environment and provide them feedback on how they did so that when they go into real life, they are able to perform better.
Rajakumar Vaidyanathan
Thank you. I think this explains actually answers my question. Just one follow up. So I assume you also use open. Source models like llama, the large language models. Do you also have some in house models in addition to this? When you do this?
Sapnesh Lalla
We built a fairly complex structure that allows us to use AI, both large language models as well as models that we have built in a secure environment. It would take me and some of my colleagues a little bit longer to explain how we do this, but we set up our infrastructure in such a way that it is safe and able to work with the right LLM for the right question.
Rajakumar Vaidyanathan
Okay. And I guess it’s the same for. The generative AI use cases as well, right?
Sapnesh Lalla
That’s true.
Rajakumar Vaidyanathan
Okay. Yeah, that’s right.
Sapnesh Lalla
Thank you.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Gaurav Nigam from Tunga Investments. Please go by.
Gaurav Nigam
Yeah, thank you, sir. So my first question is if you look at in the last few years we have done multiple acquisitions. I just wanted to check how do you internally check whether the acquisition has gone in line with your expectation or not? I mean, typically we believe revenue expansion, the synergy and process that has happened. I mean, can you give me a sense of what are the matrices that use and if it is revenue expansion, how do the previous acquisitions have fared in the last few years, including the most recent MST Group acquisition?
Sapnesh Lalla
So we typically do not use revenue expansion as a criteria. We use three key criterias. The first one being a market segment that would be attractive for us. However hard to penetrate a geography that would be attractive to us where we have not been able to create a lot of penetration. And then the last one is a key capability. So if you look at the acquisition of St. Charles that we did in November 22, the thesis was we needed to create a capability in consulting and advisory services. We also found professional services firms as a key market segment that we wanted to penetrate.
And St. Charles enabled us to achieve both scale in our consulting and advisory services, as well as market penetration with the likes of Big four, as well as management consulting firms. So our criteria is typically not to focus on revenue expansion, but to create ways in which we are able to penetrate market segments that are attractive, geographical markets that are attractive, as well as key capabilities. The acquisition of MST enable us to penetrate the dark region in a more complete way.
Gaurav Nigam
So my question was slightly different. What I was saying that let’s say when you acquired, let’s say in charge, you acquired with the thesis that you wanted to get into the consulting segment. But since the acquisition, it has been multiple years. Has it fared as per your expectation or not? Like, what are the metrics that you use? One is at the time of acquisition, but over a period of time, how do you evaluate whether that has gone as per the expectation or not?
Vijay Thadani
Other than what I mentioned, we don’t disclose the exact metrics that we look at. But what I would say is that while St. Charles is in final year of measurement, it has met the base criteria that we use to make the acquisition so far.
Gaurav Nigam
Got it. One more related question on the acquisition. If I look at the acquisition, frequency seems to have increased in the last one year or so. I mean, maybe smaller acquisition comparatively. But has anything changed in the external environment or internally which is driving this change of going for higher number of acquisitions?
Vijay Thadani
I would say, I mean, our ambition has been to become a more complete provider of managed learning services for our clients. The acceleration does not have a lot to do with market environment, but our desire to grow faster. Okay, okay, okay.
Gaurav Nigam
More internally driven. Okay, I get it, sir. And so this is the last question from my side. Sorry.
Vijay Thadani
I just wanted to say, as we gain more in terms of acquisitions, that also will be reflected in our pace of acquisition.
Gaurav Nigam
Understood? Understood, sir. Final question. When you look at revenue visibility, I think two years back it was largely driven by addition of new clients. I mean, just wanted to check, when we look at revenue visibility now, how does it spread between the acquisition of new clients versus expansion of expense scope in the existing clients and how do you see going forward?
Vijay Thadani
I think it’s a healthy mix of both. As I mentioned earlier, growth drivers are a healthy mix of wallet Share expansion in their existing clients as well as new client acquisition.
Gaurav Nigam
Got it. Great. Thank you. Thank you.
Vijay Thadani
Thank you.
operator
Thank you. Next question comes from the line of Johan Kinvasara with Asian Broken. Please go ahead.
Yohan Khinvasara
Hi. Congrats on a great set of numbers. Could you provide any details as to like what the average ticket price is. For contract which is when you onboard a new customer.
Sapnesh Lalla
Contracts tend to be between 1. Typical contracts tend to be between 1 and $5 million. A small percentage of contracts tend to be in the $10 million range per year. Okay, okay, got it.
Yohan Khinvasara
Thank you so much.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Manav Medewala with Myri assets. Sher Khan Tiscora.
Manav Medewala
So my question is more towards a vertical mix. The industrial. The industrial vertical has demonstrated impressive momentum over the last two quarters. I believe this will be majorly due to the acquisition of MST Group. So do you see this trajectory sustaining in FY27 and on the flip side the others vertical seems to be consistently losing share. Is this a part of a conscious pivot or specific headwinds you’re facing in that vertical? That was my first question.
Vijay Thadani
So you’re right. The acquisition of MST and specifically the fact that most of their presence is in the German dark region which is dominated by industrials, that has given us a head start into industrials. We think that as we grow wallet share across the clients that MSD currently has, as well as gain momentum and acquire new clients in the dark region, we should see expansion in the industrial vertical. Whether it will grow disproportionately vis a vis others is hard to tell because we are focusing across all the key verticals that we focus on. With respect to your question on others, one of the key clients in the other segment was the real estate contract that we had which ended on June 30, 2025.
And consequently you’re seeing a decline in that setting.
Manav Medewala
Okay. Okay, sir. Thank you. And another question is more towards bookkeeping. I wanted to ask on the finance cost part, is there any seasonality affecting our interest rate cycle? Cause in the last three years, including FY26, third quarter has seen a decline and then it inches up in quarter four.
Sanjay Mal
So this is Sanjay Mall. This is to do with the seasonality in terms of interest rates, movements and to that extent you will see the MTM variations which happen quarter on quarter. So the first quarter this year we have seen a bump up and just come back Basically.
Manav Medewala
Okay. Okay. Got it, Got it. Okay, thank you.
operator
Thank you. Next question comes from the line of Bharat Kulati with Dalal and Rochester broking. Please go ahead.
Bharat Gulati
Yeah, thank you for the opportunity. Thank you for the follow up. I just wanted to understand, sir, what how do we look at our verticals which are, I mean, I see that our tech and telecom has been growing extremely strong and life sciences as well, and bfsi. So is there something that is playing out correctly in those verticals that we are trying to replicate or are not able to replicate currently in our rest of the verticals that will come out that will start happening as time progresses.
Sapnesh Lalla
So the way we pick verticals of interest as follows, like you pointed out, tech and telecom, that’s been a key vertical that’s worked well for us, predominantly because the rate of change of technology is so high that it automatically creates need for training, not just employees as well as customers and partners of large technology companies. So it is cycle for training, given the rate of change of technology. Other market segments that we have chosen, we used two key criteria. One is, are the market segment high on regulatory training? So that creates an impedance or a sort of a flywheel, because regulatory mandatory training programs need to be conducted year on year and that creates sort of a predictability in a line item that is mostly distributional in nature.
So we look for market segments that have high regulatory content. Bfsi, life sciences industrials are examples of market segments that are highly regulated. So in industrials, if you look at heavy manufacturing or automotive or energy or mining or aerospace, these are all market segments which are highly regulated and therefore consume a lot of mandatory training on a year, on year basis and fit well with the annuity business model that we have. We try not to focus on market segments. That have traditionally shown a low spend on training. On the contrary, we look for market segments that have high spend on training.
Professional services and management consulting firms are an example of a market segment where per employee investment in training is very significant because as you might imagine, a big four highly regulated. And on top of that, their product is the employee or the consultant. So they want to make sure that the consultant is highly trained. And consequently, in the professional services and management consulting segment, they spend 2 to 3x of the average spend across Fortune 1000 properties. So those are some of the criteria that we use to pick the segment that makes most sense for us.
Bharat Gulati
Got it, sir, Got it. And so just to understand, so in the sweet rush, in the sweetrash clientele, what is the major which segment would majorly contribute to sweetrash’s revenue. And do we add any new verticals with that acquisition?
Sapnesh Lalla
So one of the things that we found very interesting about sweetrush is a large part of their revenue comes from creating learning materials that are used to train an organization’s extended enterprise, be it their customers or be it partners. So for example, some of their clients are the largest chains in hospitality, where the training that Speakrash creates for them is used to train their franchisees, which in turn contributes positively to the business outcomes for the franchisee or the organization that’s caring or paying for the brand and the customer service promise. Likewise, they have a number of clients that have large extended enterprises, some of them including professional associations who offer training as a membership benefit as well as not for profits, who have extended enterprises.
So that’s an area of training where Sweet Rush is able to create training not as an activity that an organization consumes, but as a product that the organization sells to create business outcomes. So that’s something that we found very interesting about sweetrush and it creates a new opportunity for us from a growth perspective. Got it.
Bharat Gulati
And just one last thing. So our utilization gains that we are seeing, which is helping inch up our margins, is that primarily due to the use of AI? And if so, then where can we see that further? Can we see that going up further?
Sapnesh Lalla
I think utilization, I mean, we are seeing gains because of AI. But question that you asked about utilization gains are more focused on improved operational excellence.
Bharat Gulati
All right. Yeah, that’s it. Thank you.
operator
Thank you. Before I take the next participant, speaker, your voice is stretching a bit. Let me just quickly do some adjustments. Just give me a moment. All right, the Next participant is Mr. Deepak from Sundaram Mutual Funds. Please go ahead. Yes, please go ahead.
Deepak
Yeah, so my first question is on Sweetrash. So if I look at Sutra’s calendar year, dollar revenue growth, it was minus 10%. And if I compare that with what we clocked in, let’s say our fiscal year FY25, it was in mid single digits. So just wanted to understand means, what was the reason for this 10% decline and how much growth are we expecting, let’s say in calendar at 26 from Sweetrush and at an overall company level, what is our guidance in CC term for FY27 for the whole company also? That is my first question.
Sapnesh Lalla
Yeah, I think as you pointed out, Sweetrush saw a challenging environment in 2024 and they were not alone. We saw a challenging environment as. As well. And it affected large strength of training industries. I think that’s really what caused them to see negative growth. What caused us to see single digit growth. I think as we look ahead and as I pointed out, starting to see modest but certain improvements in consumption, we’ve seen that across our clients. Given the fact that most of Sweet Flash’s clients tend to be organizations that serve an extended enterprise and use training as a product, they are likely to see, or they’re likely to be the first to see an uptick in their business because their business is directly linked to the performance of their clients.
Deepak
Okay, and so for FY27 then at an overall company level, including SweetRush, what is our revenue and margin guidance.
Vijay Thadani
For FY26? Is that your question for FY26?
Deepak
No, 26 is kind of overriding. I’m asking for the next fit career.
Vijay Thadani
We will be preparing our budgets and our guidance for the next year over the next couple of months. And we will be publishing that in our next quarterly call.
Deepak
Okay, one question on the cost front. So if I look at our headcount this quarter, so there was a reduction of 38 people, but despite that, our employee cost has gone up 5%. And if I recall correctly, in the previous couple of calls, you highlighted that when things are uncertain, you would rather want your P L to be more flexible. That’s why you would want to execute more of the work through that professional and technical outsourcing route rather than taking fixed cost on your P L. But if I had to break down this quarter’s analysis, then it is like there is a reduction in headcount but increase in employee cost.
And our professional technical outsource also is flat poq. So is there any change in strategy of how we deploy or execute the project?
Vijay Thadani
There isn’t a change in strategy. I think we make hiring choices across a multiple of different. Multiple of different criteria. In this past quarter we saw a reduction in offshore staffing, however, an increase in staffing onshore, both through increased go to market investments as well as some direct cost investments where our employees need to be much closer to our clients.
Deepak
Okay. And so one bookkeeping question. So if I look at your interest cost, this has come down this quarter. I’m presuming that it has something to do with your UNO payment as well, which is linked to St. Charles. And you have already highlighted in the quarterly results that due to some adjustment, we have recorded in fair value gain. So that means in future liability it would go down to that extent. So would it be fair to assume that on a quarterly run rate our interest expenses would be either at the current run rate or it would be lower.
Sapnesh Lalla
For the other income as these, as you know, observed that it has multiple components. One of the components of course is relating to this and you write the future acquisition liability has come down, but it will depend and it is linked to the performance as we go forward. And to that extent there could be, you know, the impact in the other income as it would be coming.
Vijay Thadani
He’s asking whether in future interest will reduce. Our answer will be no. Interest will be of the acquisition. So it’s likely to. To consummate the St. Charles acquisition. We have funded part of it through debt and therefore interest.
Sapnesh Lalla
You talk about sweet rush.
Vijay Thadani
I’m sorry, sweet rush. The interest cost on that debt will increase, increase on the quarter of.
Sapnesh Lalla
On the other hand, there are repayments which are happening on the other day.
Deepak
Okay, but for the cost increase.
Vijay Thadani
Our approach is not to use our funds straight away in the acquisition. If possible, we try to leverage it because I think it works out beneficial from more annuals than one and therefore to that extent the interest cost will change. But net cash or net earnings from Treasury, I mean interest cost paid minus interest or interest card earned minus paid. That will always remain very positive.
operator
Thank you. Next question comes on the release.
Vijay Thadani
Continuing to release cash.
operator
Thank you. Next question comes from the line of Rahul Jain with Dollar Capital. Please go ahead.
Rahul Jain
Yeah, hi, thanks for the opportunity. Several of my questions are answered. Just one or two. So firstly on the organic growth for the quarter, I think you mentioned the numbers in the beginning. What I kind of missed it. If you could please repeat that.
Sapnesh Lalla
Organic growth was 14% in INR and 7.2% in constant currency terms.
Rahul Jain
7.2% in CC term.
Vijay Thadani
Yeah, in constant.
Sapnesh Lalla
In constant currency terms. YoY.
Rahul Jain
Right. And what would be the QQCC number?
Sapnesh Lalla
1.1% organic Q OQ constant currency.
Rahul Jain
Right. Thanks for that. Also you suppose you had this comment that AI could be a great opportunity and you have shared some input here. But Will, if you could help me connect the point like is it would be limited to providing training which could be more like a one time training. A lot of enterprises, just like they train on, train on different capabilities. Or this could be also extended to creating agentic solution on which we could be doing a more like a recurring thing because there will be constant enhancement that would happen to the product.
And similarly on the cost side where we could be leveraging already and where we are aiming to leverage the AI to release our side of the cost as well.
Sapnesh Lalla
I would say all of the above. Some of our most exciting solutions are like you pointed out, where clients are able to get personalized learning experiences personalized for each individual employee or each individual student and those leverage the agent capabilities of AI and in turn result into subscription based business models. We have a few use cases of those at enterprise grade which are currently operational. We think that those solutions a have much stronger outcomes and we are able to create growth as well as improvements in profitability. But it will take time for them to become significantly more material than they are today.
We are taking advantage of low hanging fruit with respect to efficiencies and we have gained efficiencies using AI enabled systems from an overall productivity of performance.
Rahul Jain
So just one part to it, you said we also have a subscription business. So on the tool that we are providing, apart from training on using that, we are also charging the agent fee that then we might have created. Is that what you’re trying to say?
Sapnesh Lalla
That’s correct.
Rahul Jain
And this, these are just few project as of now and yet to scale in terms of the adoption at current point.
Sapnesh Lalla
That’s correct.
Rahul Jain
Right. But have we started creating solution which might suit many of our MTS clients or what is the go to market for this kind of a thing? What is going to be the approach? How fast you think this could become an opportunity in itself?
Sapnesh Lalla
It is a significant opportunity. However, like I pointed out, it is going to take time to scale and we are bringing these solutions to all our clients. Several clients or a handful of clients have like I mentioned, implemented these at enterprise scale. My belief is that over the next three to five years a large percentage, very large percentage of training would be delivered using the model that you described.
Rahul Jain
Sure. And lastly on the Sweet trust business, are we expecting almost like a full quarter consolidation or. It is too early to call that out.
Sapnesh Lalla
We consummated the transaction on 9th of January. So we would not be consolidating the full quarter. We would be consolidating the number of days for which they have been part of NIIT in our fourth quarter.
Rahul Jain
And also I guess you mentioned somewhere that for them the Q3 is the largest quarter. Is that what you mentioned somewhere?
Sapnesh Lalla
Yeah, that is accurate. December is the largest quarter.
Rahul Jain
Okay. So from their own annualized run rate point of view, Q4 may not be fully divided by four kind of a number. And plus it would be there only for 80 odd days instead of a full quarter. And with those things you said 10 12% type of a growth for Q4 which was another comment.
Sapnesh Lalla
What about that?
Rahul Jain
Was there a comment that in Q4 you are expecting 10 12% QoQ growth as well?
Sapnesh Lalla
That’s correct. Inclusive of SweetRush.
Rahul Jain
Understood. Thank you. That’s it from my side.
Sapnesh Lalla
Thank you.
operator
Thank you. Next question comes from the line of Pranay Jain from Banyan Tree Advisors. And a reminder to all the participants that you may press star and one to ask a question. Thank you.
Pranaya Jain
Hello sir. Thank you for this opportunity. So, a couple of questions firstly around margin. So sir, as I understand our real estate project, the real estate business was kind of higher margins and that has gone away. So on a like to like basis. If you could comment on, you know, the margin trajectory, that would be great. That is my first question and then I’ll ask my second question after that.
Sapnesh Lalla
Margin trajectory is in line with our guidance. We mentioned that not inclusive of real estate business, our margin would be the 20 to 21% range and that’s where we have reached in Q3.
Vijay Thadani
Just a clinical correction, it’s not the real estate business, it is to train people who work in real estate.
Sapnesh Lalla
Yeah, we are not in the business of transacting real estate.
Pranaya Jain
Yes sir, My bad.
Vijay Thadani
I guess you also meant the same. But I just wanted. This call is being recorded. We suddenly shouldn’t have taken switch to the real estate business.
Pranaya Jain
Yeah. Sir. So you know we acquired MST Group and you made a comment that we have been making certain investments in terms. Of go to market strategy. So what would be the discretionary portion of this investment which is, you know, kind of pulling our margins down temporarily, if at all.
Sapnesh Lalla
Discretionary? I didn’t quite understand the question. What you want to ask is what is the disproportionate component of the investment or additional investments that you are making? Oh, I think like I pointed out, the key investments we have made with respect to MST post acquisition have been sending their go to market in the dark region.
Pranaya Jain
Could you quantify it by any chance?
Sapnesh Lalla
No, we don’t break out investments based on market regions.
Pranaya Jain
Sure. Last question from my side. What is the cash component in your sweet rush deal? Like what would be the split between the upfront cash that you have paid versus the future earn out that you would be paying?
Sanjay Mal
I think we paid. Yeah, go ahead. Yeah, we paid about 10 million as a upfront and the balance is on various milestones and certain are on co op and the others are on next five years.
Pranaya Jain
Okay, got it. That’s it. From my side. Thank you and all the best.
operator
Thank you. Ladies and gentlemen, due to Time constraints. We have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Sapnesh Lalla
It looks like we might have one more question. So if there is a question we can take that as the last question.
operator
Yes, it’s from the line of Prilog Joshi and individual investor. Please go ahead.
Trilok Joshi
Hello. Hello. Hello.
operator
Yes, go ahead Mr. Josh.
Trilok Joshi
Extremely sorry I missed the first 25 minutes. What you have what you guidance for quarter four. Can you. Can you repeat just in two three minutes it’ll be possible. Or can I get the email for your this comment section before. Before market is open. It should be.
Sapnesh Lalla
He just wants the guidance or the email address.
Sapnesh Lalla
Why don’t you give your email.
Kapil Saurabh
You can reach me at kapil saurabh iitmts.com it’s k a p I l.s a u r a b h iit mts com. You will see the transcript on the website in a couple of days.
Trilok Joshi
Is it possible before. Before market open tomorrow? Can I get. I missed the first 25 minutes. Your commission.
Sapnesh Lalla
Yeah. If you can send an email to Kapil he’ll be able to respond to you.
Trilok Joshi
Can you please Repeat the email? Id just. I will sell just
Kapil Saurabh
kapil.forum@niit mts. Dotcom okay. Okay.
Vijay Thadani
And by the way you can give us. You can give us your number and couple will also get in touch with you.
Trilok Joshi
Can I give you my number now? My number is 932. Yes, hello. 932432. Go ahead. 9324-324287-42879-324-324287. Thank you sir. I am the investor of your company. Since last five years.
Sapnesh Lalla
Thank you. And we get in touch with you. Okay, thank you. All right.
Trilok Joshi
Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today. We have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Vijay Thadani
Well, thank you everyone for joining the call and what your interesting questions. As usual we learn a lot from your questions and it helps us sharpen our strategy. We are available to you for any further discussions or questions you have. Papil Saurabh just gave his email address and in any case you can reach out to us on our addresses available on the website and we’ll be very happy to interact with you. Thank you once again and wishing you all the best. Operator.
operator
Thank you. On behalf of NIIT Learning Systems Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines. It.