Concall AI

MPS — Q1 FY26 earnings call

Call held 18 Jul 2025

Management summary

MPS Limited reported a soft start to Q1 FY26 with muted revenue growth of 3.9% but strong EBITDA growth of 22.51%. This was driven by exceptional performance in Education Solutions (56.64% revenue growth, 36% EBITDA margin) and organic growth in Research Solutions (ex-AJE). However, revenue in Research Solutions was impacted by the intentional rightsizing of AJE, and Corporate Learning saw a 32% volume decline. The company announced a corporate restructuring, including the amalgamation of ADI BPO and transfer of MPS Europa AG, to streamline operations and support future inorganic growth.

Highlights

EBITDA grew by 22.51% over the previous year in Q1 FY26.
Education Solutions segment recorded remarkable growth with revenue soaring by 56.64% and an EBITDA margin of 36% in Q1 FY26.
Research Solutions (without AJE) is growing organically at 10%-11% with a robust 40% EBITDA margin.
North America bounced back to 51% of total revenue in Q1 FY26, up from 48% in Q4 FY25.
DSO (Days Sales Outstanding) was brought back to 45 in Q1 FY26.

Concerns

Q1 FY26 was a soft start with muted revenue growth of 3.9% over the previous year.
Research Solutions revenue saw a small decline due to intentional rightsizing of AJE, which reduced its annual run rate from USD18 million to USD12 million.
Corporate Learning volume was down 32% in Q1 FY26, though management expects a turnaround from Q2.

Key financials

01 Revenue Growth 3.9%
02 EBITDA Growth 22.5%
03 DSO 45 days
04 Total Headcount 3,263 employees

What they filed

Q1 FY27: revenue up 24.0%, net profit up 41.4% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	87	90	94	100	111 +28%	108 +20%	119 +27%	124 +24%
Expenses	51	56	59	65	67	67	71	70
EBITDA	35	34	35	34	44 +26%	41 +21%	48 +37%	54 +59%
Margin	41%	38%	37%	34%	39%	38%	41%	44%
Other income	4	6	5	7	1	-4	12	6
Interest	0	0	0	0	0	0	1	1
Depreciation	3	3	3	3	3	3	3	3
Profit before tax	36	37	36	38	42 +17%	34 −8%	56 +56%	56 +47%
Tax rate	26%	23%	24%	24%	28%	26%	22%	27%
Net profit	27	29	27	29	30 +11%	25 −14%	44 +63%	41 +41%
EPS	15.74	16.67	16.03	16.81	17.66	14.44	25.49	23.95

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Education Solutions
56.6% Revenue Growth36% EBITDA Margin
Research Solutions (without AJE)
0.1 decimal_fraction Organic Growth40% EBITDA Margin
AJE (within Research Solutions)
12 Mn Annual Run Rate23% EBITDA Margin (standalone)
Corporate Learning
202 employees Headcount (Q1 FY26)288 employees Headcount (Q1 FY25)32% Volume Decline

Capital allocation

high confidence

M&A ADI BPO Services Limited Merger · Announced

Simplify shareholding structure, enhance operational flexibility, strengthen direct promoter alignment, eliminate structural complexity, clear path for inorganic growth.
No change in shareholding, no tax impact, no commercial impact to MPS.

Firstly, I'd like to talk about the scheme of amalgamation. I'm pleased to announce that the Board has approved the amalgamation of ADI BPO Services Limited with MPS Limited, subject to stock exchange, statutory, and other requisite approvals. As ADI BPO is the holding and promoter company of MPS, this merger will simplify the shareholding structure, enhance operational flexibility, and strengthen direct promoter alignment, all without affecting public shareholding. The removal of the intermediate holding company eliminates structural complexity and overcomes restrictions under current layering rules, clearing the path for inorganic growth for MPS and better strategic execution. This is a key step in building a more agile, growth-focused, and efficient organization.
M&A MPS Europa AG Restructuring · Pending regulatory

Consolidate Group's eLearning business under a single, focused entity, enabling a unified, scalable, and globally competitive eLearning solutions platform, with potential to unlock operational synergies, revenue synergies, streamline governance, and enhance global market positioning.
MPS Europa AG will now operate as a step-down subsidiary of MPS Interactive Systems.

Next, I'd like to talk about the Restructuring of the overseas subsidiary- transfer of shareholding in MPS Europa AG to MPS Interactive Systems Limited. In continuation, I'm pleased to share that the Board has also granted its in-principle approval for the restructuring of our overseas subsidiary, MPS Europa AG, through the transfer of its entire shareholding to MPS Interactive Systems Limited, another material wholly owned subsidiary of MPS. This strategic realignment is a first step that aims to consolidate the Group's eLearning business under a single, focused entity, thereby enabling a unified, scalable, and globally competitive eLearning solutions platform, with the potential to unlock operational synergies, revenue synergies, streamline governance, and enhance global market positioning. MPS Europa AG will now operate as a step-down subsidiary of MPS Interactive Systems, enabling a more streamlined structure and sharper execution capability within the Corporate Learning vertical. The transaction will be executed at arm's length and remains subject to valuation, due diligence, and requisite regulatory and statutory approvals.
Liquidity Liquidity disclosed Company is comfortable taking on up to INR150 crores of debt for acquisitions, funded by cash accruals.

In terms of cash and how we're going to fund this, obviously, there are cash accruals, also we are open to raising debt if that is something that we need to do. And we've stated before that we are comfortable taking on INR150 crores of debt (range).

Guidance & targets

Revenue

AJE Annual Run Rate Revenue · FY26 · High confidence USD12 million

The run rate for AJE we are expecting for FY'26 is USD12 million, and the impact that I was giving you was Q1 FY'26 versus Q1 FY'25; the INR20 crores is a ballpark. The run rate for FY '26, we're expecting about USD12 million.

— Rahul Arora

Profitability

AJE EBITDA Margin (standalone) Profitability · soon · Medium confidence north of 30%

AJE standalone today is 23%, heading to north of 30% soon.

— Rahul Arora

Revenue Growth

Research Solutions (without AJE) Organic Growth Revenue Growth · once AJE transformation settles · Medium confidence 10%-11%

If you look at the Research Solutions business without AJE, it's growing at 10%- 11% right now. We would expect similar growth from AJE once this transformation settles. From Q1, it is expected to be back to 10%-11%.

— Rahul Arora
Overall Organic Growth (ex-AJE) Revenue Growth · Medium confidence 10%-15%

Correct, keeping AJE aside, the business is growing organically at 10%-15%.

— Rahul Arora
Overall Growth (with inorganic) Revenue Growth · Medium confidence 20%-25%

We've always had the discipline to run high-margin businesses and reinvest surplus cash into acquisitions to drive 20%-25% overall growth.

— Rahul Arora

Geographical Revenue Share

North America Revenue Share Geographical Revenue Share · Medium confidence closer to 60%-65%

We'll probably settle closer to 60%-65% from North America even as growth continues to kick in.

— Rahul Arora

M&A

Acquisition Pipeline Closure M&A · this financial year · High confidence 3 deals

We have 3 deals that are at an advanced stage right now. We're hopeful that some of them or most of them will conclude this financial year.

— Rahul Arora
Acquisition Payback Period (growth assets) M&A · Medium confidence 3 to 5 years

We think that these growth assets would be more like 3 to 5 years; essentially, we are acquiring a vehicle for future growth.

— Rahul Arora

Debt

Debt for Acquisitions Debt · High confidence INR150 crores

And we've stated before that we are comfortable taking on INR150 crores of debt (range).

— Rahul Arora

Guidance

FY26 Guidance Guidance · next quarter · High confidence will be provided next quarter

I had prepared to share strong guidance for FY'26 but my CFO encouraged me to be more conservative and wait another quarter. So next quarter, we'll also give guidance for FY'26.

— Rahul Arora

What to watch in Q2 FY26

FY26 Guidance Release

next quarter

Current Not yet provided

Target Specific FY26 guidance

Why it matters

Management committed to providing detailed FY26 guidance in the next earnings call, which will be crucial for future projections.

I had prepared to share strong guidance for FY'26 but my CFO encouraged me to be more conservative and wait another quarter. So next quarter, we'll also give guidance for FY'26.

Risks & concerns

Muted Revenue Growth in Q1 FY26
medium

Q1 FY26 saw a soft start with revenue growth muted at 3.9% over the previous year.

Management acknowledged
Volume Decline in Corporate Learning
medium

Corporate Learning volume was down 32% in Q1 FY26 as part of an intentional turnaround strategy, with expected recovery from Q2.

Management acknowledged
Revenue Decline in AJE due to Rightsizing
low

A small decline in Research Solutions revenue was due to intentional rightsizing of AJE to improve margins, reducing its annual run rate from USD18 million to USD12 million.

Management acknowledged

Q&A highlights

7 direct

Organic vs. Acquisition-driven Growth Direct

During Q1 FY'26, what's taken place is with AJE, and I'm ballparking here, there's been a year-on-year decline of about INR20 crores in revenue, and that has been highly intentional. We have exited things that were not profitable, and the focus has been entirely on making an unprofitable asset highly profitable. We have now hit EBITDA margins of 23% standalone at AJE. So, if you take AJE out, the business would have grown organically, at 10% for the Research Solutions and 15% overall.

Clarified that while overall growth might seem acquisition-driven, the core business (excluding AJE's intentional rightsizing) is growing organically at 10-15%.

Asked by Navid Virani

AJE Margin Improvement and Revenue Decline Direct

Anytime a business is operating at a low margin, we try and solve the issues in the business that are leading to a low margin. That's what we've done with AJE. There were clear, definitive measures taken, which meant that the revenue has declined, but we are constantly looking to improve the margins.

Explained that the revenue decline in AJE was an intentional strategy to improve profitability, with standalone EBITDA margins now at 23% and targeting over 30%.

Asked by Krushi Parekh

Impact of ADI BPO Amalgamation Direct

There is no change in shareholding. There is no tax impact or any commercial impact to MPS. This is a corporate restructuring at the Holding Company level. The way it was structured was that between the ultimate promoter group and MPS, there was an intermediary called ADI BPO. That intermediary is getting eliminated and collapsing into MPS.

Addressed concerns about potential dilution or financial outgo from the amalgamation, confirming it's a structural change with no adverse financial impact.

Asked by Grishma Shah

AJE Growth Timeline and Future Revenue Direct

We expect results primarily to show up from Q1 of FY'27. This year, on a conservative basis, we're forecasting USD12 million for AJE. ... We would expect similar growth from AJE once this transformation settles. From Q1, it is expected to be back to 10%-11%.

Provided a clear timeline for AJE's return to growth (Q1 FY27) and confirmed the FY26 revenue forecast of USD12 million, with subsequent growth expected at 10-11%.

Asked by Saurabh Surendra Shah

Corporate Learning Volume Decline Direct

I'll let Archana comment about the turnaround, she is orchestrating on the Corporate Learning side. But essentially, we have intentionally started to turn around the Corporate Learning division. We planned to turn the whole thing around by Q1 and start to see some revenue growth through Q2. We are possibly trending one quarter behind. But overall, margins have started to look better. Q2 margins look good, too, and things are operating fairly to plan.

Addressed the 32% decline in Corporate Learning volume, stating it was an intentional turnaround effort and expecting revenue growth from Q2 with improved margins.

Asked by Ravi Nareddy

AI Impact on Client Budgets and Business Model Direct

We are seeing Al in terms of engagements in two ways. One of the more dominant ways is to drive operational efficiency, where essentially turnaround times and throughput times of processes are managed earlier by MPS. ... In terms of revenue streams, we are getting consulting projects where customers are asking us to advise them on how AI can be used in their workflows.

Clarified that AI is primarily used for operational efficiency and market share gains, with some emerging revenue streams from consulting and e-learning projects related to AI implementation.

Asked by Jai Chauhan

Funding for Inorganic Expansion Direct

In terms of cash and how we're going to fund this, obviously, there are cash accruals, also we are open to raising debt if that is something that we need to do. And we've stated before that we are comfortable taking on INR150 crores of debt (range).

Outlined the funding strategy for future acquisitions, combining cash accruals with a willingness to take on debt up to INR150 crores.

Asked by Abhilasha Satale

2 min read 5 chapters

Detailed narrative

Q1 FY26 Performance Overview and Strategic Context

MPS Limited experienced a soft start to Q1 FY26 with revenue growth at a muted 3.9% year-over-year. Despite this, the company achieved a significant EBITDA growth of 22.51% over the same period. Total headcount increased from 3,007 to 3,263 employees, reflecting anticipated scale-up. Days Sales Outstanding (DSO) improved to 45 days, an achievement management aims to sustain, demonstrating strong working capital management.

Segmental Performance: Education, Research, and Corporate Learning

The Education Solutions segment was a standout performer, with revenue soaring by 56.64% in Q1 FY26 and an EBITDA margin of 36%. This growth was entirely organic, driven by strategic collaborations. In Research Solutions, revenue saw a small decline due to the intentional rightsizing of AJE, which now operates at an annual run rate of USD12 million with a 23% standalone EBITDA margin, targeting over 30%. Excluding AJE, Research Solutions grew organically by 10-11% with a 40% EBITDA margin. Corporate Learning experienced a 32% volume decline as part of an intentional turnaround, with management expecting revenue growth from Q2.

Corporate Restructuring and M&A Pipeline

The Board approved the amalgamation of ADI BPO Services Limited with MPS Limited, a move aimed at simplifying the shareholding structure and enhancing operational flexibility without affecting public shareholding or incurring tax/commercial impact. Additionally, the in-principle approval was granted for transferring MPS Europa AG's shareholding to MPS Interactive Systems Limited, consolidating the Group's eLearning business. The company has a robust acquisition pipeline with 3 deals in advanced stages, targeting companies in Education and Technology with over USD10 million revenue and 15% EBITDA margin, expecting to close some this financial year. Acquisitions will primarily be majority stakes (51-60%) with a payback period of 3-5 years for growth assets, funded by cash accruals and potentially up to INR150 crores in debt.

AI Adoption and Operational Efficiency

MPS is leveraging AI primarily to drive operational efficiency, particularly in the Research business, to meet customer demands for faster content production. This has enabled market share gains and margin expansion. In Education, AI is focused on product development and differentiation. The Corporate Learning segment also uses AI for operational efficiency, contributing to improved margins. The company is also exploring new revenue streams through consulting projects on AI implementation and e-learning programs for AI readiness, though these are currently small.

Geographical Focus and Growth Drivers

North America's contribution to total revenue bounced back to 51% in Q1 FY26, up from 48% in Q4 FY25, and is expected to settle closer to 60-65%. This region is a key growth driver, especially for the Education business, which benefits from the macro environment in the US higher education sector. The company's overall organic growth, excluding the intentional AJE rightsizing, is estimated at 10-15%, with a target of 20-25% overall growth including inorganic contributions.

This is an AI-generated summary of a publicly available earnings call transcript.

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