NIIT Learning

NIIT Learning Systems Limited reported a robust Q3 FY26, with revenue reaching INR4,997 million, reflecting a 19% year-on-year and 5% quarter-on-quarter growth. In constant currency terms, revenue grew 11% YoY and 2.5% QoQ. Excluding the real estate contract that ended in June 2025, growth was even stronger at 28% YoY and 9% QoQ. Organic revenue growth stood at 14% YoY in INR and 7.2% in constant currency, demonstrating the underlying strength of the business.

The company maintained resilient profitability, with EBITDA at INR1,038 million, a 10% increase YoY, and an EBITDA margin of 20.8%, which is within the guided range. Margins benefited from improved utilization and MST's stronger contribution, partially offset by seasonality in the St. Charles business and the absence of the real estate contract. PAT for the quarter was INR743 million, with an EPS of Rs. 5.42, supported by a lower effective tax rate of 22% due to a gain from acquisition liability adjustment.

NIIT Learning Systems Limited is making significant strides in its AI-First strategy, with AI-enabled revenue growing to approximately 11% of the total business this quarter. Management highlighted successful enterprise deployments of AI solutions, particularly in personalizing learning experiences and building real-life simulations with AI avatars. The company views AI as a 'game-changer' for learning and development, expecting a 'very large percentage of training' to be delivered using AI models within the next three to five years, leveraging both large language models and proprietary secure models.

The company completed the acquisition of SweetRush on January 9, 2026, for up to US$26 million, adding approximately $22 million in annualized revenue with double-digit margins. This acquisition is expected to strengthen NIIT's proposition in outcomes-led performance-critical learning and complement its managed learning services engine. While SweetRush's margins are currently lower, they are projected to become EPS-accretive by FY27 and margin-accretive over six to eight quarters, with other initiatives ensuring overall margins remain stable.

NIIT Learning Systems Limited demonstrated strong financial health, with cash and cash equivalents at INR9,046 million and net cash at INR6,927 million, up from INR5,917 million last quarter. Operating cash flow was robust at INR1,039 million, a significant increase from INR777 million in the previous quarter. CAPEX for the quarter was INR126 million, primarily directed towards ongoing investments in AI and infrastructure refresh, reflecting strategic capital allocation for future growth.

For Q4 FY26, the company expects revenue growth of 10-12% QoQ and 25-26% YoY in constant currency, inclusive of SweetRush. Full year FY26 revenue growth is guided at 14.5-15% in constant currency, with margins in the 20-21% range. Management emphasized a strategic focus on verticals like Tech & Telecom, BFSI, Life Sciences, and Industrials, chosen for their high regulatory content, significant training spend, and inherent annuity cycles, which provide predictability in a largely discretionary market.