Ladies and gentlemen, good day and welcome to the NIIT Learning Systems Limited quarterly results 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Thadani, Vice Chairman and Managing Director, NIIT Limited. Thank you, and over to you, sir. Thank you. Good afternoon. Thank you very much for joining this call, and it's a busy result season, and in that, for you to have decided to spend this time with us, we are truly grateful. We're looking forward to a very interesting discussion. What we have on the agenda today is to provide you an update on the quarter three of the financial year 2024-2025 or FY 2025 performance, as well as discuss the outlook for the business and other questions that you may have from any of us. I have with me the Chairman of the company, Mr. Pawar, Sapnesh Lalla, the CEO. We also have the business leadership team from the U.S. who has joined us today in person, and we also have Mr. Sanjeev Bansal, the CFO, as well as Kapil Saurabh in investor relations, as well as Saurabh Taneja, and many of our other colleagues. We'll all be very happy to answer all your questions, so without further loss of time, I would like to hand you over to Sapnesh Lalla. Thank you, Vijay, and thanks everyone for joining. Good afternoon to you all. In our prepared remarks, I will comment and review on the financial numbers in detail first and then provide color commentary on the quarter that went by, as well as towards the end, provide expectations going forward. Our revenue for the quarter stood at INR 4,189 million. That represents a growth of 7% year-on-year and 5% on a quarter-on-quarter basis. The growth in constant currency terms was 5% quarter-on-quarter and 5% on a year-on-year basis. After what was a challenging second quarter, it has recovered growth despite continuing challenges in the macroeconomic environment, as well as some of the seasonality that impacted parts of our business in Q3. In line with our earlier stated expectations, we see further acceleration in Q4, both sequentially as well as on a YoY basis. The improvement in our growth was caused predominantly by new customer addition in the previous quarters, the 100% renewal track record that we enjoy, the wallet share expansion opportunities that we were able to take advantage of, as well as some of the green shoots that we saw where some of our existing customers improved their consumption in our second quarter. We also started to see our investments in new capabilities, including AI, start to create a differentiating position for ourselves, as well as make improvements in our operations. Over the last couple of years, as I've mentioned often, the business has been resilient in the face of heightened uncertainty. Despite rate cuts that started in September of last year, the business environment continues to see uncertainty in the near term, given mixed economic indicators, geopolitics, policy uncertainty, and continuing regional conflicts. However, the business has been resilient through all of this uncertainty, given the strong customer additions, as well as improving wallet share with some of our existing customers. We have seen a sharp compression across management consulting and professional services firms in Q2 and lower-than-expected volume in our North American real estate contract, which had impacted revenues in Q2. Despite continuing challenges in these two areas, the business growth in Q2 has been driven by a ramp-up of new customers, like I pointed out, 100% renewal track record, and improving wallet share from existing customers, and a partial recovery in spending across some customers. The BFSI, Life Sciences, are leading segments, which are leading growth both year-on-year, and the Tech segment has started to see quarter-on-quarter growth. The general theme that's driving increased conversations is a pressure to cut cost. As you might expect, during times of uncertainty, most organizations look at controlling their costs, and to some extent, that's starting to create interesting opportunities for us. Like you might imagine, while cost cuts have impacted in the past where budgets have gone down, but now we are starting to see increased acceleration in outsourcing opportunities that may result in acceleration of new customer additions. We are continuing our investments to take advantage of these upcoming opportunities, and we think that we will see acceleration in new customer additions as we look ahead. During the quarter, we added two new MTS customers, one a top 10 bank, as well as a large automobile major. In addition, the company had three contract renewals, retaining its 100% contract renewal track record, as well as expanded its operations with two of its existing customers. The company continues to maintain a 100% contract renewal record. The number of MTS customers now is at 92. The revenue visibility, given the new customer additions, the renewals, as well as expansions, is now at $391 million. As stated earlier, while disproportionate focus on cost is resulting in lower consumption across a number of our existing customers, we are starting to see this focus on cost result in an acceleration of outsourcing opportunities. With our investments in sales and marketing, consulting and advisory services, as well as a reputation as a trusted and reliable market leader, we believe we have an opportunity to gain a larger share of the upcoming opportunities and be able to accelerate growth. Our deal pipeline continues to be strong, and we are also starting to see a number of large deals across a wide spectrum of market segments, and we hope to take advantage of all of these opportunities going forward. Our business continues to win awards, given the focus on innovation. The business earned 39 Brandon Hall Awards in technology, and these include 13 awards, six gold, six silver, and one bronze for NIIT's AI-powered technology innovations. Coming back to financials, the EBITDA stood at INR 946 million, and it was up 1% quarter-on-quarter. The EBITDA margin was 22.6%. It was down 97 basis points quarter-on-quarter and down 129 basis points from a year-on-year perspective. Margins include the impact of environment on product mix, primarily the drop or the weakness in the management consulting and professional services segment, as well as the North American real estate contract. It also included transition and one-time expenses that were unique to Q3. The depreciation for the quarter was INR 159 million. I would now invite Sanjeev, our CFO, to provide commentary on the net other income, which was INR 26 million. Thanks, Sapnesh. Net other income was INR 26 million this quarter as compared to expense of INR 38 million last quarter. It includes treasury income of INR 95 million. Strategic growth and acquisition-related expenses of INR 33 million as compared to INR 91 million previous quarter. This includes gain of INR 23 million due to fair value adjustments in future acquisition liability versus expense of INR 43 million last quarter, which means INR 14 million in interest cost, which is basically paying down of the loan. Exceptional expenses of INR 42 million relating to inorganic growth initiatives. Demerger-related non-operating transitory expenditure of INR 5 million, and we had other expense of INR 30 million, which included forex loss of INR 14 million this quarter as compared to INR 40 million last quarter, and net other miscellaneous expenses of INR 17 million. The tax for the quarter stood at INR 195 million, which was at 24.1% ETR. Over to you, sir. Thanks, Sanjeev. The profit after tax for Q3 stood at INR 617 million. This was up 8% quarter-on-quarter, 9% year-on-year. The EPS stood at INR 4.53 per share versus 4.2 previous quarter and 4.21 same quarter last year. The balance sheet and cash flow metrics continue to remain strong. The DSO stood at 62 days versus 59 days same quarter last year. Cash and cash equivalents are at INR 7,769 million. CapEx for the quarter was INR 118 million. The net cash stands at INR 6,999 million versus INR 6,554 million. The ratios continue to remain strong and robust. The company ended Q3 with an addition of 33 new NIITians, resulting in the total NIITians at 2,356. As I've mentioned before, we continue to make disproportionate investments in new capabilities as well as in sales and marketing. The use of GenAI is gaining prominence in our customer conversations, even though hesitancy remains in adoption of GenAI-based solutions across enterprises. We continue to make rapid progress in leveraging AI across multiple aspects of our work and are starting to see benefits accrue to us across a number of project areas and work streams. In projects and work streams where we are using AI, we are becoming significantly more ambitious in terms of the outcomes that we can drive for our customers, as well as we are starting to see improved efficiency in some of our operations. We would like to reiterate that the rapid transformation in the industries we serve, owing to digital transformation, decarbonization, acceleration in biopharma, and AI present a large and multi-year opportunity for the company. We see a number of organizations transforming and restructuring to improve their cost structure and achieve higher variability in their cost structure. We're starting to see acceleration in outsourcing opportunities, owing to the strength and feel uniquely positioned to take advantage of these opportunities and continue to lead the industry in terms of growth and profitability, specifically as some of our competitors are starting to become distracted. We also have an active pipeline of inorganic opportunities that we are pursuing, and we will report on these as soon as we have material information too. In terms of our guidance, we would like to reiterate our guidance that we provided in the previous quarter. We continue to see robust contract pipeline and ramp-up in new customers. However, our revenue this quarter is marginally lower in terms of, I'm sorry. Again, let me restate what I said. We would like to restate our guidance that we had provided in the previous quarter. For the full year, we expect 7% growth in constant currency. Margins are expected to be at the higher end of the guided range of 22%-24% for the full year. Like I was starting to say, in spite of challenges in the macroeconomic environment and some of the seasonal dips that we've seen across a couple of our market segments, we had a good quarter, and we continue to expect to see acceleration in our performance as we get into Q4. Thanks, and back to you, Vijay. Thanks. Okay. So there are no further corporate-level updates. So at this point of time, then we'll open the floor for questions. And as usual, the operator will manage the questions too. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, you may press star and one to join the question queue. Our first question comes from Deekshant B. from DB Wealth. Please go ahead. Hi. Congratulations, management, for an excellent recovery in our numbers. I have a couple of questions, firstly on what kind of service or product is giving us strength in our numbers right now? What has been the leading driver for us? I think we are seeing strength across the different practices of the different work streams that we offer from an outsourcing perspective. Most of our customers are looking at opportunities to streamline their operations. A number of our customers have large sprawling L&D organizations, and that lack visibility as well as understanding of the investment that they are making and the return that they get. So a number of our customers want us to operate their large L&D organizations as a managed service and provide them the visibility of what they are spending, help optimize the spend, as well as improve the outcomes that they get from that spend. Okay. So generally, you are seeing a growth in the discretionary spend by customers right now in your conversations as well? Like I pointed out, we are seeing acceleration in the number of conversations we are having where organizations or our prospects are looking at outsourcing. In some cases, with our existing customers, we are also seeing deal shoots where organizations are looking at increasing the consumption of our services across the different lines that we serve. Got it, sir. So, secondly, we are noticing a lot of companies have been integrating with AI, specifically the Copilot and Microsoft product services. How are we seeing growth in this particular bucket in terms of they would need more L&D and maybe streamlining their services with their existing product portfolio? Are you seeing any green shoots here with your existing customers or maybe new ones? Our focus in utilizing AI has been on how to make learning and development operations more efficient, as well as how to make them more effective in driving improved learning outcomes. We've had a number of conversations with both prospective as well as existing customers on how AI can be integrated in their learning organizations. We've had some success, specifically at a departmental level, in doing projects where AI has been implemented. However, like I pointed out in the prepared comments, we see hesitation in rolling out AI-enabled solutions across the enterprise. Okay. The reason for me to ask this to gauge if the AI growth is still starting to kick in or not, that's the only reason, sir. I know our company has been working hard on it. So my last question is, it's two-pronged. One is you had mentioned that in our commentary that some competitors are getting distracted. Could you show more color on this? What do you mean by it, and how can this be a growth position for us? I won't get into specifics, but we track a number of organizations as key competitors, and one of them has been going through a structured sale, and we think that that will create a distraction for the management team as well as create anxiousness for some of their customers. Got it, sir. Got it. Thank you so much. Sir, lastly, just our accounting question is, historically, what has been our strongest and our weakest quarter, if you could just throw some light on it? I would say we see some weakness from a profitability perspective in our Q3, historically, and that's mostly seasonal in nature. From a revenue perspective, we have Q2 and Q3, which are weak, and then we start seeing strength, to some extent, marginal strength or marginal improvement in Q4, and then we start to see some steam in Q1. Got it, sir. Got it. Thank you so much. All of this is mostly around how holidays and year-ends are set up in the United States and Europe. We see fewer working days in our Q3, as well as vacation time in Europe, mostly, and to some extent in the U.S. in our Q2. Okay. Okay. Got it, sir. Thank you so much for the detailed reply. I'll join the queue. Again, congratulations on the numbers. Thank you. Thank you. The next question comes from Siddhant Dand from Goodwill. Please go ahead. Yeah. Hi. I just wanted to ask, is this our first auto client, and what geography would it be? It is our first auto client. They are based out of the U.K. Okay. My second question, we are a little curious. Why would we not have any Indian companies in our MTS business? Is it because of our choice of customers, or is it because India is just too young for managed training services? So far, we've seen most of the opportunity across large global multinational organizations based out of the United States and Europe or North America and Europe, and that's where we have focused most of our energy. Okay. Perfect. Siddhant, sir, you have any other follow-up questions? No, no. That's it. Thank you. Thank you. The next question comes from Ganesh, an individual investor. Please go ahead. Sir, congratulations, sir, for a very good set of numbers in such a difficult macro. And you have mentioned in your commentary that the outsourcing strategy from the clients has reversed now, that in spite of difficult macros, they are willing to outsource. So this is a new sort of phenomenon we are experiencing because of our new offerings. Can you please give some highlight on this? Thank you, Ganesh, for your kind words, and I really appreciate the time that you take to both provide encouragement as well as follow NIIT and the NIITians' support over the last several years. So thank you. Thank you, sir. In terms of your question, what we are experiencing is uncertainty in the market, and likewise, our customers are seeing uncertainty in the economic environment, as well as several of our customers, whether it's in energy or it's in pharma or in BFSI, are going through transformations that could be seen as business transformations, for example, caused by decarbonization or renewable energy in the energy sector, biopharma in the pharma sector, or the advent of increased digital implementations in BFSI. So a lot of our customers and prospects are going through significant transformations. And when you pair that with the economic uncertainty, a lot of customers become very careful about the fixed cost structure that they have and any discretionary expenses that they might be making. A lot of our prospects and customers start looking at converting their fixed cost structures into variable cost structures, as well as find methods of driving efficiencies in what they are spending, as well as try to figure out how they can get better outcomes from their spends. And that's where they see NIIT, NLSL, reliable market leader who is able to convert that vision of driving efficiency and improved outcomes into a reality for them as a managed service. But previously, we have guided for 20/20 type of guidance for revenue and EBITDA. Now that we have upgraded it for 22%-23% EBITDA, so do you think that going forward we can maintain the same EBITDA and in spite of increased revenues and increased competition? Thank you very much and all the best. This is my question. Our effort would be to maximize EBITDA and profitability and use technology and efficiencies that we can create to achieve that. However, I would continue to say that this business, the way we have modeled it, is a 20/20 business from a medium to long-term perspective. Thank you very much sir, and all the best. Thank you. Thank you. The next question comes from Yashodhan Nerurkar from Ionic Wealth. Please go ahead. Yeah. Hi. Thanks for the opportunity. This is the first time I'm interacting with you, so just pardon my lack of understanding of certain aspects of the business. So the first question I have is, to acquire a client and to gain additional share of the business, what is the average cost that you spend behind per client, and in how much time do you recover the cost? So this is information that we do not make public. However, what I can say is it takes us between four to eight months, sometimes close to nine months, to acquire a new customer. It typically takes us about nine to 10 months of work to recover the cost of acquisition. Okay. So after you acquire a client, then another eight-to-nine months, by the time you recover the whole cost that you put in? Approximately. Okay. Okay. Perfect. And another question that I have is, sir, right now, I mean, most of your clientele is in the U.S. and Europe. U.S. would be the major dominant part. And since this is a contract business, like you have always alluded to, most of your employee base would be in the respective geographies. Is my understanding correct? No. So we have, like I mentioned, approximately 2,400 NIITians. Of those, about 25% are outside of India, and I would say the split across North America and Europe would be about 60/40. So 60/40 between U.S. and Europe? North America and Europe, 60/40, and about 25% of the 2,400 outside of India. Okay. Got it. And just a follow-up to one of the questions I asked you before by another participant. I mean, see, your business is majorly dominant, and you're getting major opportunities from U.S. and Europe. But is there any specific reason why Indian companies don't give you that sort of opportunity? Or they're not that attractive? No. What I would say is if you were to look at the share of Indian companies in Fortune 1000, the majority of companies in Fortune 1000 would be based out of North America and Europe. Latin America, Southeast Asia, India have probably less than 20% of the share of Fortune 1000. So we think that our energy is best spent in the markets where there are higher opportunities. Right. So basically, it's just about the propensity of spend that these larger companies have, and that's the kind of market you want to play around in. Yeah. I would say that's where they are. So it's important for us to put in efforts where our customers are or prospects are. Okay. Got it. Got it. Thank you so much. That's it from my side. And good luck to you. Thank you. And thanks for joining. Thank you. The next question comes from Ibrahim from ICICI Bank. Please go ahead. Hello. Hello. Yes, sir. Please go ahead. Good afternoon, sir. Hello. Hello. [Foreign language] Am I audible? Yes, sir, you're audible. Please proceed with your question. Okay. [audio distortion] First of all [audio distortion]. So I have a question regarding that difference in the cash and cash [audio distortion] and net cash and cash equivalents. I can't hear you very well. Sir, if you're using the speaker mode, may we request to use the handset mode, please? Okay. Just give me a second. We can't hear you properly. Hello. Hello. Now I'm audible, sir? This is much better, sir. Please go ahead. Okay. Okay. So I have a question regarding the difference in the cash and cash equivalents and net cash equivalent, as you told. So total cash and cash equivalent is somewhere around INR 7.77 billion, and net cash is somewhere around INR 7 billion. What is the difference between cash and cash equivalent and net cash? Net cash and cash. Yes, sir. So before I answer that, net cash is an internal term which we use. Okay. I think overall, cash and cash equivalents represent the cash in the company, which are invested in various equivalents. Right. Right. Excuse me. I think you have a disturbance on your side. Ibrahim, sir, if there is a lot of background noise coming from your side, so if you can help me with the line when the management is answering your question. Just give me a second. Now some better? Yeah. Yeah. Yes, sir. Yes, sir. The cash and cash equivalent is the gross cash, which is with the company. Okay, sir. Net cash is net of debt, which it has. Which we have away from the bank. Yeah. Okay. Okay. Okay, sir. That's all. Thank you, sir. Thank you. Thank you. The next question comes from Sankaran arayanan S. from ithoughtpms. Please go ahead. Good evening, sir. Thanks for the opportunity. So my first question is regarding the acquisition of your competitor by a private equity firm. So one of the few things that they have mentioned in their acquisition document is that the NIIT has the potential to change the content creation, how the process works, and its pricing. So I just want to hear from you that how would you navigate such a huge risk as we are in one of the content creation services, and how are you going to navigate this risk in the future? The way I understood your question was you said that one of our competitors has stated that they see a significant risk in how AI can affect or disrupt the learning business and drive down the price points that they can drive. I think, like I pointed out earlier, AI will fundamentally change how learning and development works. Now, we can choose to let it play its course and not do anything about it. And if we were to follow that course, your argument would be valid. We would become spectators and watch the price points and the business go down. However, like I pointed out, AI also has the opportunity to significantly disrupt and significantly change what you can expect out of the NIIT. That requires investment in AI so that we can get AI to do what training has not been able to accomplish in the past. For example, using AI, we can improve the time to proficiency for a person. Using AI, we can become more efficient in how training dollars get spent. Using AI, we can remove a lot of constraints that come with training today. And all of that will result in improved performance of our customers. And from an overall perspective, our customers do not have a significant worry about spending money on training because the return on money that's well spent on training is almost infinite. Training is the difference between being able to not do something and doing something. So investment in training has an infinite return when applied properly. I think with AI, especially as ambitious as we are with what we can achieve, we think that we have a very significant opportunity to improve how our customers are able to get a return on their L&D spend using AI. That will actually not drive down the price points. It will actually increase the price points and increase investments that customers make. At least that's our point of view. Like you pointed out, it is in sharp contrast with what you read. Okay. Got it, sir. So actually, this statement was brought out by a private equity firm which bought one of your competitors in the U.K. So that's why I asked this question. And one more question, sir. So we have a significant portion of our revenue coming from a lot of tech companies. So my question—so correct me if my understanding is wrong—so the tech companies have itself capabilities of creating their own large language models, which would create their own content. So could you throw some light on how efficient we are to provide our service using the Gen AI in content creation? Sir, if you don't mind, can you speak a little softly? And I think your mouth is very close to your mic. So the voice is getting muffled. And if you can, we could understand most of it, but I think just. I think I got the gist of what you were saying. Just repeat so that. What you were asking was given that several of our customers are in the technology segment, and they are closer to AI, and they are working, most of them are working on AI to solve a bunch of industry problems. And why would they, or what would we do to get better off them from an L&D perspective? So I will go back to the basics. All of our customers who become our customers have been doing their training themselves, and they've been doing a good job of training on their own. One of the reasons why they outsource training to us is because that's not their business. So for example, for an oil and gas company, their business is to dig oil out of the ground, to refine it, to distribute it, and make money out of it. Likewise, for a pharma company, their business is to discover new molecules, convert them into drugs and therapies, and then bring them to needing customers. None of our customers are in the business of training. They are in a business which is a technology business or a banking business or an insurance business and so on and so forth. So every minute that the management team spends away from the business is time taken away from growth opportunities that the business might have. So when they look at us as an organization that could effectively, widely, and efficiently do the work for which they have to spend management time, it's an attractive value proposition for them. The second part of your question was that why would we be able to use AI better than some of our technology customers to solve learning problems? My thinking on that is our customers in the technology segment are focused on using AI to solve their customers' problems. So for example, their customers might have problems with customer service, and our customers would spend an enormous amount of investment to create technologies that help use AI or that have used AI to solve a customer service problem or a research problem or how to discover molecules faster. So our customers are focused on solving their problems, and that's where their investments are. We are a learning and development company. We are a training and education and training company. And our investments are in solving training and education problems. And that's what we do, and we do it really, really well and often do it much better than what our customers can. Long answer to your short question, but I hope I covered both parts of your question. Yes, sir. Yeah. Thank you so much, sir. Thank you. The next question comes from Kunal Tokas from FVC. Please go ahead. Hello. I'm audible? Yes. Yes, sir. Please go ahead. Okay, so first question, sir, the new MTS customers that you have, are these customers first-time outsourcers of L&D, or are you bringing it over from some competitors? A large majority of the customers that we've added are first-time outsourcers. However, I would say about 25%-30% of the customers that we get are takeaways from our key competitors. In your interactions, do you get to know what the main reason for them switching over is? Yeah. We do get to know the reason. And often, our customers are very clear about why they are looking at outsourcing, whether it's for the first time or why they are looking at moving from existing partners. Okay, and another question was regarding the ESOP policy. In your financial filing, around 10 million ESOPs outstanding as of 31st December. That comes out to around 7% of total shares outstanding. So is that sort of not a little too high, or is that sort of the cost you pay to acquire top-tier talent? We think that what we are doing is in line with the market and creates an attractive value proposition for key NIIs. I think, let me give you some further color. I'm Vijay Thadani. First of all, ESOP is a very important part of making sure that our executive team's focus is aligned with that of our shareholders, number one. Number two, they get an opportunity, of course, in a much smaller way than our shareholders for wealth creation, and that their benefits are linked to the value that they add. So I think there is a very good and clear alignment. The typical policy in outsourcing industry or services industry is companies start with the 10% of the equity as the pool, the ESOP pool, and that's also consistent with the guidelines which are available in the regulatory domain. ESOP pools are first approved by the board, NRC and the board, and then are also sent to the shareholders for their agreement. After the shareholders approve, the pool is formed. The company overall is 40 years old. Of course, these pools are not 40 years old. They are 15, 20 years old, 15 or 20 years old. In the combined company, NIIT and NIIT Learning Systems, there was an amount of pool that was visible. That pool was getting over. Typically, companies consume their pool over a four or five-year period, three or four-year period. Our consumption has been slower than that in the past. After demerger, which happened in August, or the listing happened in August, and we got the permission to issue ESOPs. When the demerger happened, there was an overhang of the pool which was coming from the past, which the employees of both the companies got shares or options of both the companies because it was a combined option. So one part of our ESOP pool is that. The second part is the fresh options which have been given from the fresh pool that was deployed after demerger. And the totality that you see at this point of time reflects that. When this pool gets over or is about to get over, we would get back to the shareholders for enhancing this pool, which in the history of the company, from the time we started giving stock options, it has happened only once. Now, because at this time, it was a smaller pool which was added just after demerger, I think this will come up, and that is in future as the compensation policy of the company evolves. I think that answers your question. If you look at the compensation studies, typically, senior employees in many of these companies, many of the companies of our kind, are compensated, number one, on the basis of fixed, number two, on the basis of an annual variable compensation, which is aligned with the goals, and number three, with a long-term incentive, LTI, which is in the form of equity. In case you are not listed, then, of course, there are other formats in which it happens. These are the three components which form the compensation package. I think that's perhaps more than what you had asked for, but I thought, let me give you a clear picture. Yes, sir. Definitely. Thank you very much for the detailed answer. Another question that I had was about the consulting business. So if you could explain a little about what sort of activities you perform there, and does that business have significant overlap with the MTS business or maybe in terms of cross-selling opportunities? And how does one measure the performance of that business? The consulting business is a key arrowhead in terms of our offerings. Typically, an organization engages with a consulting organization or engages our consulting services when they want to make an important change or they want to make an important transformation. The transformation could be, for example, they might be a decentralized learning organization where there are 15-20 different learning organizations across the enterprise, and they want to see if there is benefit in centralizing that organization. Or an organization may be looking at transforming their operating structure, or an organization might be looking at making strategic interventions to improve the performance of leadership. So our consulting business focuses on being the spearhead that enables organizations to answer or to create change trajectories such that they can transform themselves. In several of these opportunities, when we provide consulting, we also uncover outsourcing opportunities because that's one tool that's often used to realize the benefits of transformation, and so in a number of opportunities where we do consulting, we also see downstream revenue opportunities. Is this business consolidated under the St. Charles Consulting Group? That is correct. The reason why we acquired St. Charles was to, or one of the reasons we acquired St. Charles was to gain this capability, and we are consolidating this capability under the St. Charles team. We have, of course, added our team to that existed prior to the St. Charles acquisition as part of this team. Okay. All right. Thank you very much. I'll get back in the queue. Have a good day. Thank you. Thank you. The next question comes from Rahul from Dolat. Please go ahead. Hi. Hope my line is okay. Yes. Firstly, some clarification on the guidance comment that you made. Firstly, you said if you could share what could be the CC impact that we are assuming in nine months so far, that would be one. And I think I heard that you intend to end the year at higher end of your band. So does that imply a very high margin of 27%-28% in Q4, or I heard it slightly differently? Let me first reiterate what I said about our guidance. If you go back to what we had said last quarter, we said that we would grow for the year at 7% plus. We are reiterating that growth guidance on revenue in constant currency terms. In this quarter, we grew at 5% year on year in constant currency terms. That's the first thing that I said. Second thing that I said is that we had guided that our margin will be in the 22%-24% range for the whole year. This quarter, we delivered an EBITDA margin of 22.6%. We expect that for the year, while we will be in the 22%-24% range, however, we'll be at the higher end of that range. So you just said the last part of what you just said is only for Q4, is it, or for the full year is what you're trying to refer? For the full year, our guidance was to be in the 22%-24% range, and we are reiterating that guidance, and like we had guided in the previous quarter, that we would be at the higher end of that range, and that's what we are reiterating. Fourth quarter. Yeah. Fourth quarter. Sure. Sure. Secondly, the management consulting segment continues to see some pain. If you could share what's happening out here? And also, since our revenue visibility is now in early teens or 12% types growth, so what should be the aspiration? Are Are we going back to double-digit growth, and when we plan to reach that 20% aspirational growth mark in our future? Thank you. Well, like we've said in the past, we expect this business to be a 20/20 business, so 20% growth in the medium to long term. We are in the process of, or we are in our planning process at this time. We should be done with our planning process in about a couple of months, and by then, hopefully, we will have a better handle on some of the uncertainties that are going on in our key markets, and at that time, we will have a better view of what the next year might look like and when we might be able to get past 20% from a growth perspective. Right, and on the professional service part of the question? I'm sorry. Yeah. On professional services, in real terms, that business or that market segment has seen similar consumption contraction that most other market segments have faced. I mean, one interesting nuance is that the management consulting and professional services market segment actually held out for a little bit longer as compared to other market segments that we serve, and so while, say, for example, in the last one year, many of the other segments that we serve had already contracted from a consumption perspective, the management consulting and professional services segment had held up, but then it started to see compression in spend, and the reason why that happens is in management consulting and professional services, people is the product, and they invest almost three times as much as a typical enterprise spends on training. So in real terms, the compression in spend that we saw in most other customer segments, we did not see that in management consulting and professional services till recently or till the current fiscal year, whereas in other market segments, we had started seeing it about two to two and a half years ago. We think that while the compression started later, it also probably will lift faster because these are the organizations that help others restructure, innovate, bounce back. And so we expect that the period of compression will not last for as long as the other market segments saw. So we expect this segment to start growing soon. With this comment, will it be still safer to assume that it is at least a couple of quarters away from us? The recovery, I mean. What is a couple of quarters away? Recovery in professional services. Recovery in professional services. I would say we should start to see some recovery next quarter and then continued recovery from then on. I think the environment, as it becomes more certain, and I think things are now beginning to fall in place, at least this week. Things seem to be pointing in that direction. Sure. Sure. Thank you. That's it from my side. Thank you. Thank you. The next question comes from Gaurav Arora from Equirus. Please go ahead. Yeah. Hi. Good afternoon. Just one question on the so you mentioned that one of your competitors is going through a structured sell-out. So of the new customers that you have acquired or some of the existing customers that have ramped up or you've seen scope expansion, does any of those deal in a big way with that competitor, or they don't do business with them? I don't think I followed your question, but from what I could tell, you were seeking that of the two customers that we acquired in this past quarter, was any of them a takeaway from the competitor we spoke about? I don't believe so. Yes. Okay. Sure. And second question is on the macro outlook with the regime change in the U.S. So does that impact your business in any way? Does it benefit you, harm you? What are your views on that? It's hard to tell. The changes happened just a couple of days ago, so it's hard to tell what the impact might be. But at this point in time, like I said, it's hard to tell what the impact might be. It might take a couple of months for us to really understand what the impact might be. My personal belief is that it is going to accelerate. It's likely to be a business-friendly government. It is also quite likely that it will help accelerate the opportunities that we have. Sure. And lastly, just in case you do disclose, what is the contribution from your top clients, top five clients, and top ten clients in terms of revenue? We do not make that information public. It's sensitive information, and we don't make that information public. Sure. Thank you so much. Thank you. Thank you. Requesting participants to use handsets while asking a question. The next follow-up question comes from Deekshant B. from DB Wealth. Please go ahead. Hi, sir. You have mentioned that seasonally, Q3 is a weak quarter for us on profitability terms, and Q1 and Q4 is seasonally a strong quarter on net terms. I'm assuming because the year-end is of December, we would have some good growth on revenue, but since the past few quarters, this has been one of the best top-line growths that we have. Is it safe to assume that this is the first spike of turnaround that we are seeing, or is that some thought process that internally you are looking at? Like we've said in the past that we were expecting to do better in H2 as compared to H1, and that seems to be playing out. We think that the worst is behind us, and we are likely to see improved sequential performance. Got it, sir. Sir, you have alluded to better margins going forward. But from a contrarian perspective to think of this, do you think that 22%-ish margins are the bottom margins for us? This is the least margins that our business could do? Let me say again what our expectation or what our business model is. Our business is modeled around a 20% growth and 20% margin in the medium to long term. We are actually delivering margins that are higher than the model, given some of the remaining impact of COVID. We think that over a period of time, the margins will stabilize around 20%, and the growth should stabilize around 20% as well. Okay. So last question, sir. How important is it for us, as a business perspective, that a growth in the housing market in the U.S., how much of that has a correlation with the growth in our particular business? That's an interesting question. And it will take a lot of time to unpack what causes growth in housing. But what I could say is. I have a feeling your question is related to the North American real estate training we do. Is that what it is relating to, or overall, how does it? No, sir. Overall, because I mean. Sir, overall, because we also serve BFSI as a client, so I think you understand what I'm alluding to. Yeah. I mean, I was going to try and unpack it for you. The housing market growth is typically proportional to the interest rates, which is the supply of money that's available, and the inventory that's available in the market. The inventory is related to, again, supply of money because only when builders can borrow, will they build houses that people can buy. If interest rates continue to be high, the inventory is low, and the propensity to sell is low. So the interest rates, to a great extent, drive the propensity to buy or sell houses, at least in North America. Right now, the interest rates are high, and it looks like they are going to continue to be high for the near term. So it's quite possible that real estate activity or volumes in North America will be muted. At least that's our point of view. Okay. So. Does that make sense? Yeah. 100%, sir. Thank you so much for the elaborate answer there. Is it safe to assume that directionally, as the interest rates, whenever they do, that's an uncontrollable factor, everyone? But whenever they do drop and we see a growth in the real estate market, we should see a growth in the training spend as well? I mean, what I could generalize is, as interest rates go down, the supply of money increases. Supply of money increase is directly proportional to certainty in the environment. That certainty improves, business improves. So yeah, you're right. Got it. So thank you so much, sir. Thank you so much. Thank you. Thank you. The you. The next question comes from Ananya Kambampati from Anand Rathi Investment Banking. Please go ahead. Hi. So I have been following your company for a while and would like to acknowledge your efforts in also navigating through uncertain times. Now, my question is regarding your North America real estate training contract, which was renewed last year for a one-year period. So could you please provide an update on its current status? I hope I was audible. Like you pointed out, it was renewed for one year, middle of last year, and that renewal is going to run out towards the middle of this year, and the renewal was limited to one year because the regulator was directed by a legislative mandate to move from an exclusive model of contracting to a non-exclusive model of contracting, and after our contract gets done, they will get into the market and look at organizations who would be interested in partnering with them on a non-exclusive basis. We are evaluating our options, and we would keep you updated as we get closer to the date. Okay. Thank you so much. Thank you. The next question comes from Vinay Nadkarni from Hathway Investments. Please go ahead. Yeah. Good evening. I have just one question. If I look at your performance from March 2023 till December, that's almost seven quarters now. It has been in the range of INR 10± crore from four crore, I mean, 400 crore mark. In this period, you have added at least two clients per quarter, minimum. So you would have added something like 10%-15% in your new clients. And you say you have got a 100% renewal track record. How is it that it doesn't translate into business? Is the business per customer going down? I think it's a very good question. I'll relate back to what I said a little bit earlier. You're right that if you are adding new customers, our business model would expect us to grow on a quarter-on-quarter basis because each customer brings growth. However, what we've seen over the last, I would actually say not just seven quarters, but nine or 10 quarters, is a compression in spends with our existing customers. So to peel back, how do we get 20% growth? The model for 20% growth is we are able to expand the business we do with our existing customers by about 7%-10% year on year. We add new customers each year, like you pointed out, and those result in about 7%-8% growth in the coming year. And then each year, we add new customers, which results into growth as well. Now, what we saw over the last two and a half or so years is that the existing customers, instead of growing, were compressing their spends, so instead of growing 7%-10% year on year, they were actually going down 10%-15%, and that took away from growth, which had to be compensated by expansion or wallet share expansion in some of the existing customers, as well as contribution from new customers, so you saw a netting effect, which resulted in lower growth, if any. Thanks a lot. The last question was on this nine-month period. If I have to look at the constant currency growth, what would that figure be for these nine months? Or will tell you the answer to that question. I think we have been giving the constant currency growth every quarter. And we reset that constant currency at the end of the quarter. So if you do that same reset for the year, you would see the guidance. It's matching with the guidance that we are given. So what you have asked is a little bit of a calculation [crosstalk]. I can provide you that answer offline. Fine. Then what was the constant currency growth in FY 2024 last year? Full year? Give us a minute. It's probably 11%. It was 11%, right? It was 11%. Okay. Thank you. Thanks a lot. And wish you all the best. Thank you. Thank you. The next question comes from Chirag from White Oak Capital Management. Please go ahead. Yeah. Hi. Thanks for the opportunity. Sir, continuing the earlier participant's question on client addition. So my first question is, if I look at your employee count, it is actually down on a YoY basis. And in fact, I look at it, it is kind of flattish since Q3 FY 2023, or even in fact, even earlier than that, we are in this range only. So despite adding new customers, our client addition, our employee count has not really changed. So that's one. If you can just, is it because of efficiencies, or it is always something else if you can highlight? And a related question is, on-site and off-site, the 20/80 ratio that you indicated, over there also, so the reduction is happening where? If you can just highlight that. So I would paraphrase my response as follows. A, as I pointed out earlier, we've not had the expected growth over the last one and a half or two years. Second, we have seen significant uncertainty in the market. And the way our staffing model is set up is we always have variability in our staffing model. So whenever we see uncertainty in the market, we try to compress the fixed headcount that we have, or at least increase the growth in fixed headcount, and rely more on variability in the headcount that we have so that we are able to protect our margins rather than expanding our fixed headcount and taking the risk of utilization. So over the last two years, our strategy has been to service the additional customers through addition of variability from a headcount perspective rather than adding fixed headcount in times of uncertainty. Okay. And this reduction happens where? In India or this reduction happens outside India? Whenever you have to manage the headcount, where does this adjustment happen? See, we have natural attrition. Like I pointed out, in the past, when there is less uncertainty, we backfill for attrition. In the past several quarters, when attrition has happened, we have chosen to backfill through variable headcount rather than fixed headcount. So the reduction that you see is natural attrition, and it is more or less the same across India and outside of India. Thanks. Thanks a lot. So second question is, again, following up on headcount, this 20/80 ratio that you indicated, is it a choice that you have made, or is it the outcome of the kind of contracts you are doing? And is there a risk given the new regime coming in the U.S., the need for higher on-site headcount, the ratio changes? And if yes, if you can just share some of your past experiences, how does it work? So our headcount split across India and outside of India has been about 25/75 for the last several years. And I feel that it is going to stay at the same ratio for we think that for the services that we offer our customers, that's the right ratio. Okay, and the headcount outside India, are Indian nationals or people of Indian origin, or they are locals whom you hire? So our business is a very local business outside of India. And consequently, most of our employees outside of India are of local origin. Local origin. Okay. I mean, outside of India, our employees come from or originate from 39 different nationalities, India being one of them. Yeah. Thank you. Thank you very much. Thank you. The next question comes from Deepak from Sundaram Mutual Fund. Please go ahead. Yeah. Thanks for the opportunity. Am I audible? Yes, sir. Yes, sir. sir. Please go ahead. Yeah. So my first question is regarding our interest cost. So this quarter, we saw a sharp reduction in our interest cost. And if I understand correctly, most of it is related to the earn-out provision with respect to the St. Charles acquisition, right? So could you throw some light on what led to this sharp reduction in the interest cost? And going forward, what could be the quarterly run rate of this in absolute terms? I would request Sanjeev to answer that question. So one is, of course, there is a little bit of a debt which has got paid off as an installment. To that extent, it is lower. But the other part, as you rightly said, there is due to the lower revenue, which is there at professional services in St. Charles. It has got readjusted. And to that extent, interest cost is lower relating to that acquisition. Okay, and so going forward, the quarterly run rate, let's say if the management consulting as it picks up, then do we expect this interest outflow to move up? The quarterly run rate has been actually 43 million each quarter. Previous quarter was 43 million. This quarter, we had a reversal. We believe that next quarter, it will be in the range of 39 million. Okay. Got it. And so my second question is more strategic. So for example, there are some businesses which we conduct with our clients, which we do on our own kind of capability. And there is some we do as part of strategic outsourcing, right? And there is also professional outsourcing. So when do we decide what kind of business do we take on our own terms? And what do we kind of give to our client through strategic outsourcing? That's a great question. We bring our capabilities to our customers, and when that capability sits within NIIT, we call it self-delivery or NIIT-delivered business. Most of that tends to be for areas where we believe our customers see a differentiated capability within NIIT. There are many times when a customer uses a number of third-party suppliers to buy off-the-shelf training. So for example, one of our pharma customers might want to buy pharma off-the-shelf training or off-the-shelf training that might be relevant to pharma companies. In those situations where we cannot bring differentiated capability to our customers, we end up buying that training for them, and we park that under what we call strategic sourcing. Okay. And so when I was looking at our revenue, it is growing at, let's say, 5%, 6%, right? But our employee cost on QoQ basis in INR terms has grown by 2%. But the professional and technical outsourcing expense has grown by 16%. Is it because now we are getting more businesses which are more temporary in nature rather than long-term in nature? That's why our professional and technical outsourcing expense is growing at a faster pace than, let's say, our employee cost because more and more business is temporary and which has been outsourced over, let's say, trainers and partners? So like I pointed out to the earlier question, when there is uncertainty, we look at using higher variability in our expense. And to a fair extent, that's what we experienced this past quarter. We will continue to look at balancing variability with fixed expense as we go forward and as we have a better understanding of the market environment. Okay. And sir, for us, the typical contract which we enter, it is generally two to three years, right? It is between three to five years. Three to five years. Okay. Thank you so much, sir. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to one per participant. If you have any other follow-up questions, please rejoin the queue. The next question comes from Lakshmin arayanan from Tunga Investments. Please go ahead. Thank you. I have one question. In terms of the mandatory training, as a percentage of our total revenues, what is the mandatory training related revenue? And second, what has been the revenue side? I mean, that you are on the part of the cost side, but on the revenue side, what is your revenue coming from these two pillars? Lakshmi, we got the first part. Could you repeat the second part of the question? The second is not the cost side, where actually we augment the revenues of the customer. So what is the percentage of revenues coming from re-augmenting the revenues of the customer? Let me try to answer your first question. We still could not clearly understand what you wanted to know about the second question. The first question we understood was what percentage of our training comes from mandatory training. Like you may have noticed, a number of our customers are in market segments where there is significant mandatory training due to the compliance and regulatory nature of their business. For those customers, so customers in highly regulated spaces such as BFSI, such as energy, such as mining and commodities, such as aviation, the mandatory training tends to be between 40% and 50%. However, in segments such as technology and telecom, there is a very, very small portion of mandatory training. Got it. Thank you. So the second part of the question is that, let's say a customer sells a license, and the license is being sold, then actually there is a training which you actually give either to implement the product or something like that, where for every dollar of revenue earned, you actually get billed along with that, and then the company passes on some benefit to you, right? I was asking from that point of view, what is your revenue contribution from that? So that information, we do not make publicly aware because it becomes very specific to different customers. What I can say is that there are a number of customers who have outsourced their customer education. And when I say customer education, let's say, quite like you pointed out, when an organization sells a license to their product, they often attach training to enable the customer to be able to get value out of that license. And when they outsource that training to us, that is in line, I think, with the question that you asked. So we have a few customers who have outsourced their customer education to us. I would unfortunately not be able to go into more detail in terms of how much we do for each of those. Thank you. Operator, can we keep it the last question, or are there more? Sure. The next question comes from Pratap Maliwal from Mount Intra Finance. Please go ahead. Hi. Am I audible? Yes, sir. Please go ahead. Yeah, go ahead. Okay. Thanks for taking my question, and thanks for patiently answering all our questions. I just wanted to have one clarification on the North American real estate contract that is up for renewal, I believe, in the middle of this year. So what was the size of that particular contract? And assuming that maybe it doesn't come back to us, then does it affect our growth rates for the next year? Does it kind of impede us into getting to that 20/20 kind of growth rate that we target? So given non-disclosure agreements, we do not get into specific volumes or run rates of different contracts. It's a specific business. It was or it is a material part of our business. And we are in a planning cycle at this point in time, like I mentioned earlier. And as we complete our planning over the next couple of months, we will be able to inform better on the growth rates for the future. Understood, so thanks for patiently answering all the questions. Thank you. Thank you. There is one last question, Operator. Yes. We have a follow-up question coming from Kunal Tokas from FVC. Please go ahead, sir. Am I audible? Yes. Yes. Okay. Just a quick question, sir. How much of a role does cost play in a customer's decision to choose an MTS provider? And where do you stand on the cost rankings compared to your competitors? In most outsourcing opportunities, cost is a critical decision-making criteria. Across our competitors, what I would say is our belief is that if a prospective customer asked for five bids, they would get the pricing which is within 5%-7%. There is slight grouping from a pricing perspective across competitors. Most of the decision-making is really focused on the value that they get out of a relationship rather than the cost. Okay. Thank you very much, sir. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thanks for taking the time. I know we went over a little bit, but thanks for asking insightful and detailed questions. I did want to mention that Fosway, who is one of the analysts who provides insightful analysis on our business, came out with a report. They look at different organizations and rate them on performance and potential. They rated our company in the top right-hand corner ahead of most of its competitors. Thanks for being patient, and thanks for all your insightful and detailed questions. We appreciate the time you take. Thank you very much. Thank you for joining us despite other priorities. I think we went over as far as this call is concerned, but your questions always give us new ideas and new things to think about. Thank you very much for being there and asking all those questions. Look forward to your continued support, guidance, and questioning as we become better and better. And as Sapnesh pointed out, I think to the extent the future is visible, we did share. But I think in the next quarter, we'll get much more clarity about how things are panning out. So with that, thank you very much, Operator, and you can close the call. Thank you. On behalf of NIIT Learning Systems Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.