MPS

MPS Limited reported a robust Q1 FY25 with FX-adjusted revenue of approximately INR 180 crores, marking a 36.3% year-on-year growth. Despite a PBT decline in the quarter, management anticipates a quick turnaround. Key strategic achievements include reducing top 10 customer concentration to less than 45% of revenue, improving revenue quality with platforms contributing 30% of consolidated revenue, and enhancing working capital efficiency with DSO improving to 55 days.

The Content Solutions business demonstrated strong performance, growing by approximately 32% in Q1 FY25 compared to the previous year. However, margins for this segment were suppressed to 28.66%. This suppression was largely attributed to the acquisition of AJE, which was initially a loss-making asset but has since transitioned to profitability under MPS's management. The Journals component continued to drive revenue growth, benefiting from strong service delivery and consolidation in the supply chain.

eLearning Solutions saw FX-adjusted revenues grow by 6% in Q1 FY25, though this was slower than initial expectations. Overall margins in this segment were suppressed as the company navigated a strategic shift to an operating model embracing gig workers, following the successful model of Liberate Learning. Management is confident that margins will improve significantly from Q2 onwards, with an expectation of achieving about 12% growth in the eLearning business by the end of FY25. White spaces identified for future growth include managed services, platforms, and training delivery, primarily through inorganic routes.

The Platform business, including the AJE acquisition, experienced substantial growth of approximately 80% in revenue during Q1 FY25. Product roadmaps are on schedule, with the transition to THINK365 underway and the release of DigiCore Pro's sandbox environment. Management noted a 'flurry of activity' and new opportunities, driven by a positive perception in the research community and MPS's position as an independent choice in the market. The platform side is expected to double its growth from last year in FY25 and achieve 10%-12% growth from FY26 onwards.

The acquisition of AJE is considered a 'game changer' for MPS, providing unique access to the China market and closer proximity to research funders. AJE has transitioned from loss-making to profitable, with over USD 5 million in annual employee costs eliminated. Revenue has remained stable between USD 1.7 million and USD 1.9 million per month. While currently 95% B2B2C, the focus is on driving B2B growth in the second half of FY25, with AJE's margins expected to align with the content and platform business average (closer to 40%) by the end of FY25.

MPS's 'Scaling Global' agenda saw a robust start in Q1 FY25, with North America and Europe accounting for 74% of revenue, down from 91% last year, indicating successful diversification. The company aims to surpass competitors in Research, Education, and Corporate Learning markets in FY25. Management is bullish on the education vertical, anticipating a significant boost post-election in the U.S. and continued digital transformation in higher education, expecting to dominate a new comprehensive market combining pre-acceptance, post-acceptance, and platform solutions.

MPS has set an ambitious target of achieving revenues north of 1,500 crores at similar margins (30%-32%) within the next five years, specifically targeting 1,500 crores by FY27. This growth is projected to be a mix of organic and inorganic expansion, with 400 crores from organic growth (12% CAGR) and 600 crores from inorganic growth, leading to a total 25% CAGR. The company plans to complete one more acquisition by the end of FY25, similar in revenue size to AJE, to further fuel its growth trajectory.