Ladies and gentlemen, good day and welcome to NIIT Learning Systems Q4 and FY25 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, Vice Chairman and Managing Director. Thank you and over to you, Mr. Vijay. Thank you. Good afternoon. Welcome, everyone, on this call today. We are going to discuss NIIT Learning Systems Quarter 4 and FY25 results. First of all, thank you for your continuing interest in NIIT Learning Systems and for joining the call today. I do know you had other options, but thank you for giving us your time. We will be sharing the details, as I just talked about, of Quarter 4 as well as for FY25 results of NIIT Learning Systems, trading symbols NIITMTS.NS. We will be discussing not only the performance of the business, but also the outlook for the business, certain updates on the inorganic activity, as well as certain cost-profit actions like dividend, etc. I will come to that part towards the end. To start with, I am inviting our CEO, Mr. Sapnesh Lalla, to make the opening comments and briefing, based on which we will open it for Q&A. I have in the room with us the rest of the top leadership team, including our Chairman, Mr. Pawar, the CFO, Mr. Sanjay Mal, Kapil Saurabh, Investor Relations, and all our senior finance and business leaders. We will be very happy to all join in answering your questions. Sapnesh will lead the call, and he will start with the briefing. Over to you, Sapnesh. Thank you, Vijay, and thanks, everyone, for attending this call. Good afternoon to all of you. In our prepared comments, I will review the performance and also share expectations of the path ahead. First, let me set the context. In a challenging and volatile environment, our growth in Q4 was 3% quarter-on-quarter and 8% year-on-year. In constant currency terms, it was 0.7% quarter-on-quarter and 6.2% year-on-year. When we announced our Q3 results in this past January, we had expected higher sequential growth in Q4, driven by a continued ramp-up of new customers and a partial recovery in spending from existing clients. However, as we are all experiencing, there has been a significant increase in the volatility and economic uncertainty the world over. This led to a significant impact on volumes in our North American real estate training business, for which Q4 is typically a very strong quarter. We had a slower-than-expected ramp-up from a large new customer, which has spilled over to Q1 and is now on track to be completed in Q1. In a handful of our customers, we've had deferrals or cancellations, more than deferrals, cancellations of scheduled training activity in the second half of the quarter, predominantly in February and March. The sudden nature of this revenue impact, combined with an unfavorable shift in product mix, resulted in a disproportionate impact on the margin, which came in at 20% for the quarter. I also wish to point out that despite the challenges we've had going to the current environment, our business has continued to outperform our competitors, demonstrating strong resilience with industry-leading growth and profitability. The business continues to see strong customer wins, three new MTS contracts comprising of two new logos and one expansion. In addition, we had one renewal. The visibility is now at $390 million. We maintain a 100% track record across all customer segments, a track record of renewals across all customer segments. We continue to expand our share of wallet with most existing customers. The revenue for the quarter was INR 4,297 million. It was up 8% year-on-year and 3% quarter-on-quarter, as I pointed out earlier. Constant currency revenue was up 6.2% year-on-year and 0.7% quarter-on-quarter. EBITDA for the quarter was INR 857 million, was down 14% year-on-year and down 9% quarter-on-quarter. EBITDA margin was at 20% for Q4. In addition to adding new customers, as I pointed out, we had one contract renewal and one scope expansion. The company continues to maintain a track record of 100% contract renewal, reflecting continuous improvement in our long-term competitive position. The number of managed training services customers at the end of Q4 stood at 93. The visibility, as I pointed out, is at $390 million vs $335 million when we closed Q4 last year. Coming back to our financials, the depreciation was INR 167 million. The net other income was INR 3 million. The treasury income, this includes the treasury income of INR 118 million, strategic growth and acquisition-related expenses of INR 55 million, de-merger-related non-operating transitionary expenses of INR 5 million, and other expenses of INR 56 million, including forex loss of INR 36 million and net other miscellaneous expenses of INR 20 million. The tax was at INR 206 million. ETR stood at 29.7%. The tax was a tax bit higher in Q4 due to certain notional expenses on consolidation, which were not included in the tax computation. I'll request Sanjay to spend a minute on the ETR or the increase in ETR in Q4. We have a tax charge of INR 206 million, which is higher than the Q3, which was INR 195 million. However, this is lower from the last year, same quarter, to INR 194 million. The overall impact has been typically for the inadmissible expenses, which is the notional expenses on consolidation. These are not admissible for tax. To that extent, there is an impact primarily relating to fair value and future acquisition liability and the year-end co-op, which we typically see in the Q4. Thanks, Sanjay. The profit after tax for Q4 was INR 487 million. The EPS was at INR 3.58 per share versus INR 4.54 previous quarter, INR 4.02 last quarter, same quarter last year. For the year, the revenue was INR 16,533 million. This is up 6% year-on-year. The revenue is up 4.8% on a constant currency basis. The EBITDA was at INR 3,763 million versus INR 3,762 million in the previous year. The margin was 22.8% versus a margin of 24.2% last year. The depreciation was INR 619 million versus a depreciation of INR 592 million last year. Net other expenses were INR 80 million as compared to INR 200 million last year, primarily due to higher treasury income this year. The treasury income was INR 411 million as compared to INR 279 million last year. The strategic growth and acquisition-related expenses were at INR 267 million. Demerger-related non-operating or transitionary expenses were INR 29 million as compared to INR 115 million last year. Other expenses, which include foreign exchange expenses and miscellaneous expenses, were at INR 196 million as compared to INR 90 million last year. The PAT for the year was INR 2,275 million, which was up 7% year-on-year. The EPS was INR 16.75 per share versus INR 15.82 last year. The balance sheet and cash flow metrics remained strong. BSO stood at 56 days as compared to 62 last quarter and 53 same time last year. Cash and cash equivalents are at INR 7,742 million. These include the earn-out payment to St. Charles earlier this past quarter, as well as a minority investment in a company called Strivr that Vijay will talk about after I complete these comments. The CapEx for the quarter was INR 145 million versus INR 118 million previous quarter, reflecting continuing and increasing investments in using generative AI to build transformative products. The net cash stands at INR 7,036 million as compared to INR 6,099 million previous year, INR 5,659 million last year, same quarter. The return ratios continue to remain robust. We ended the year with 2,410 employees at the end of Q4. This was up 54 quarter-on-quarter and up 14 year-on-year. As we exit this year, our employee base is more or less what it was when we exited last year. As I mentioned, when I started the call, the market uncertainty is driving significant focus on costs, resulting in conversations around large cost takeout and cost transformation opportunities. We think we are very well positioned to take advantage of such opportunities because organizations, when they look at costs or cost takeout, look for reliable partners who can both advise them as well as operate their business. I think we have reached that position with most of our customers. With our investments in AI consulting and advisory services, as well as disproportionate investments in sales and marketing, along with the reputation as a trusted and reliable market leader, we believe we have an opportunity to gain a larger share of the upcoming opportunities and to accelerate growth. Our deal pipeline continues to be strong, including large outsourcing opportunities across different market segments, including technology, professional services, automotive, life sciences, BSSI, and others. NIIT Learning Systems Limited continues to make disproportionate investments, as I mentioned, not just in sales and marketing, but also use of generative AI across the different parts of our business. Generative AI, as we found at a Confluence event that we conducted earlier this year in Orlando, generative AI is part of almost every conversation. A number of our customers are evaluating the use of GenAI in transforming L&D, though I would say there is still some hesitation in large-scale adoption of GenAI solutions. I would, however, report that in Q4, we did win our first significant managed training services customer, which is where the work that we would do for them will be purely driven by the use of GenAI in every aspect of the work that we do for them. We continue to make rapid progress in leveraging AI across multiple aspects of our work, and we expect that over time, we will have higher adoption across a larger percentage of our customers. I would like to reiterate that the rapid transformation in the industries we serve, owing to digital transformation, use of AI, decarbonization, acceleration, and biopharma, present large and significant opportunities for NIIT Learning Systems. We see a number of organizations transforming and restructuring to improve their cost structure and achieve higher variability in cost structure. We're starting to see acceleration in outsourcing opportunities. Owing to this trend, I feel we are uniquely positioned to take advantage of these upcoming and emerging opportunities and continue to lead the industry in terms of growth and profitability, specifically as some of our competitors are distracted and others are focused on other parts of their business. We also have an active pipeline of inorganic opportunities that we are pursuing. We will report more on this as we reach closure on any of them. Like I mentioned earlier, during this quarter, we announced a strategic minority investment in Strivr Labs USA. I'll spend a minute on the company and then let Vijay talk about Strivr as well, as well as cover some of the other points that he mentioned. Strivr was incubated at Stanford University's Virtual Human Interaction Lab. Strivr was founded in 2015 by Derek Belch, then a graduate student and assistant football coach for the Stanford Cardinals, along with Jeremy Bailenson, Stanford professor and VHIL founding director. The company offers customizable content, data analytics to track user performance, and realistic simulations to develop practical skills. By leveraging virtual reality technologies, Strivr enhances engagement, improves skills, and reduces training cost making. It's a leader in XR-based immersive learning space with clients ranging from top sports teams to professionals in banking, retail, and healthcare industries, and other Fortune 1000 companies. Strivr reported a revenue of $18.2 million in the calendar year 2024. I wanted to spend a minute on our guidance. We see, as I mentioned earlier, a robust contract pipeline and ramp-up in a number of customers. Revenue growth during the year would, however, be moderated by the completion of the North American real estate contract, as I pointed out previous quarter in January. For the full year, we expect a 10% plus growth in constant currency revenue with the goal of achieving 3-4% QOQ growth in the first quarter. We expect the margins to be in the range of 20%-21% for the full year. I will now request Vijay to take you through some of the corporate actions that we have taken. I have time to finish. I have just two points to talk about. One was the investment in Strivr. I just wanted to state that this is a strategic investment for NIITMTS. The company believes that the investment in Strivr is in line with our stated strategy of investing or taking positions in strong, innovative companies which are going to contribute very significantly to the training landscape. Extended reality learning solutions is a very, very important component of that as we go forward, and we think that this will position us very well. In fact, it is already beginning to position us very well as we speak in customer situations. This XR-driven immersive learning, combined with our GenAI capability and GenAI competence that we are building in building very efficient and effective solutions, I think will position us very well competitively and help us lead the or implement the L&D transformations the way our consulting teams have envisioned. This is one of the many that we would, or a few that we would talk about in times to come. As mentioned before, we have a strong inorganic funnel, but obviously, there has to be an agreement on terms as well as the value addition that each partner will bring on the table. As and when these will materialize, we'll be sharing them with you. The second part which I wanted to talk about was the dividend. The dividend is, as you know, an IT group. Dividend policy has been to be a consistent dividend-paying company and pay a consistently improving dividend% as well as amount in line with the overall growth of the company and not get governed by a single or a few events on the way. Other than some very, very significant events, NIIT has always been consistent in paying dividends in its 30-plus years of being a public company and then for NIIT MTS for the last few years. In line with that, last year, the dividend that we had paid was INR 2.75 per share. This year, after deliberations, the board has recommended a dividend of INR 3.30 per share. This, obviously, is subject to the approval of shareholders at the AGM, and that will then get formalized and get distributed accordingly. These were two statements I just thought I would share with you. I would now suggest to Ms. Sapnesh that we open the forum for Q&A. Operator. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on the touchstone telephone. 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'll wait for a moment while the question queue assembles. The first question comes from the line of Siddhanth from Goodwill. Please go ahead. Yes, hi. My first question is regarding the 500 with margin fall disposal. Any reason why outsourcing expenses have shot up? There were a couple of reasons, and I mentioned these in my prepared comments. The first one is the significant reduction as compared to expectation that we experienced in the real estate market. That was first. Second, as I mentioned, the real estate business A is a high-margin business, and B normally experiences very significant growth when we move from Q3 to Q4. Typically, Q4 is a shoulder quarter for us. We have a high quarter in Q3, and then we see typically a dip in Q4. We were, however, expecting to do significant growth QOQ, predominantly on account of the ramp-up of a new customer that we acquired late last year. Some of the outsourcing expenses or the increase in outsourcing expenses that you saw was in accordance with the ramp-up of a new customer. This customer was likely to get to steady state in Q4. However, it's taking a little bit longer to get to steady state, and we think that it will achieve steady state in Q1. From a revenue perspective, we did a little bit less than what we expected. This also had a margin impact. The last one really was that we had a number of program cancellations in the second half of the quarter, which resulted in two unexpected schedule changes where classes got canceled, and we were unable to recover from the expenses that were already scheduled for these classes. Okay. Does the 20%-21% margin guidance include this slowdown? Or if there is a ramp-up of these customers again, we can expect it to be on the higher end like previous years? In this coming year, like I pointed out, we are expecting a 20%-21% margin. We think that we have opportunity to do better than that, and we will continue to strive to do better than that. I think as we look ahead, a fair part of this coming year, we will not have the advantage of the North American real estate business. That will, to some extent, bring down the margins. Then over the latter half of the year or towards the end of the year, we will have two internal efforts. We will have opportunities to improve margins. Okay. A follow-up would be, if the Ontario contract is over, the North American real estate one, should I assume the 100% renewal rate is gone? Because I'm unable to understand that metric, to be very honest. Our contract renewal rate continues to be 100% for all contracts that come up for renewal. Like I had pointed out earlier, there was a legislative mandate in the province of Ontario in Canada that expected the regulatory body to move the contract from an exclusive provider to a non-exclusive model. From a legislative perspective, this contract was not available for renewal. In what situation does it become the 100% rate goes to, let's say, 99 or 95? No, like I pointed out, if a contract is available for renewal, we have always been able to renew it. However, if a contract is not available for renewal, which means it's out of neither we are going to get nor anyone else is going to get, then we don't count it in our computation. Okay. Understood. Another question is, I've said some of this before. We understand the policy of the dividend payout of being consistent and increasing it every year, but the base itself seems very low. Considering the very low capital requirements and the excess cash you already have on the balance sheet from the demerger, would it not be better to have a higher dividend payout after 50% of profit? Yeah. No, you are absolutely right on one observation that you made. The second is also the board takes a call on what all is involved in the coming years. I think the fact that we are looking at intense inorganic activity, we are also looking at volatility in the environment where there will be sudden need for cash inflows. There are specific opportunities for investing very significantly in generative AI. I would say at this point of time, we are at the early stage of that curve. Today, in the board meeting, we were also discussing about how do we accelerate the investments in compute activity, for example. Not that we would like to get into setting up large data centers, but definitely, there are opportunities of various kinds which are in the play. I think keeping all this in mind, we would make sure that the overall yield that our shareholders get is balanced in terms of a dividend as well as an appreciation. I think the combo is perhaps the way to look at it. From a more selfish perspective, I would add that when prospective customers evaluate NIIT to outsource L&D, which is critical to their business, they look for companies who have strong balance sheets and have strong money in the bank to handle the ups and downs, to handle ramp-ups, and so on and so forth. It is a balanced call, Siddharth, we would like to say. Okay. Thank you. Thank you. Next question comes from the line of Janish Shah with Investment Professional. Please go ahead. Mr. Shah, please go ahead. Yeah, yeah. Am I able to convey? My voice is clear? Yeah. Thank you. Two questions. One, first, about the growth visibility which you have been giving at 10%. However, if you look at the pipeline and also the visibility on the revenue, the numbers which you have given is at least like a 13%-14% higher. And assuming that the pipeline is remaining strong, what is holding you back from, I mean, what are the thought process for giving that 10% guidance? Especially that till last quarter, you were guiding for a visibility more closer to like 20% on a very reasonable time frame. That's the kind of sustainable growth of this business that one starts. Second is on the expenses, basically the outsourcing expenses. You can give us a little bit of an understanding how the execution generally works and how should we expect or how the revenue recognition and how the expenses are being classified, especially in a sense that when we are also looking at the number of employees has also increased for the year-end, which, I mean, generally has been flat for the last couple of years, but we have started increasing. That also is a little bit of a contradicting data point where there is a confusion about how the expenses or basically the growth outlook looks like. The third is probably on the outstanding on St. Charles t. How much is the balance to be paid now for Sijan? Thank you. These are my questions. Thank you very much. Third party, I think St. Charles could be St. Charles. Okay. STP. Okay. I can start with the first one. I think your first question was on the quantum of growth. If you look at a guidance of 10% plus, what you will notice is that there is a netting that is going on for this coming year, and that is compounded by the uncertainty in the environment. Compression of spends with our existing customers. While a pipeline of new customers and prospects continues to be strong, they are continuing to sign new orders. The netting because of the sunset of the North American real estate contract, which takes away from some of the growth, is one factor. The second factor really is uncertainty where, in times of uncertainty, the consumption of training gets impacted. If things improve, that should go up, though with a little bit of a lag. That's really why you are seeing the 10% plus guidance from a revenue growth perspective. In terms of number of employees, like I pointed out, we are flat year-on-year. We have added about 14 additional employees on a base of approximately 2,400 employees. It is 14 employees up year-on-year. I would say that our ratio of offshore versus onshore has improved favorably. From an overall perspective, we are trying to control expenses or direct expenses. In terms of your question of outsourcing, like I pointed out earlier to the previous caller's question, we are in the ramp-up process of one of our large customers, and we are increasing the variability in our cost basis. You do see a little bit of a higher outsourced expense predominantly. That is our way of improving variability in our cost basis so that we have a better response to uncertainty. I think your last question was on St. Charles, and I would request Vijay to respond to your question on St. Charles. Yeah. I'll simplify it for you. The maximum amount that they could have earned if all the projections had been met at the highest end would have been $65 million. There are two tranches left still. In these two tranches, they have an opportunity to do that. That's how we would like to state it. That's how it has been stated in the contract. We have already processed two. Three are now in the past and now two more are left. Okay. Allow me one more. If you allow me one more, can I go with one more question? Please. Your question. Yeah, yeah. I mean, you clearly said that the generative AI is transforming this industry. I mean, that also creates a demand, also the way you are going to deliver. Can you give a little bit more understanding about the future and investment, how things are going to shape up for your industry in general? Would it also lead to a change in the margin structure since you already have one customer, significant customer, who has already been onboarded on a full AI delivery model? If you can just give a little bit of an understanding about how the transition is going to happen in a little bit of a detail that will help in getting a sense of how the business is going to shape up in the next two, three years that we have. Thank you, sir. I could go on for a few hours trying to answer that question, and I might still not do great justice with the answer, but I'll do my best. See, I think generative AI is going to fundamentally change how training is practiced. The profession of training is going to go through a very profound and fundamental change over the next few years. I think we are at the tip of that iceberg, and that iceberg will start revealing itself over the next few years. I think we are going to see substantial changes in both the efficiency of delivering education and training, but more importantly, we'll see very significant changes in the effectiveness of training. At the most advanced stage, you could potentially foresee an AI tutor who is the personal tutor for each and every employee in an organization. Heck, you may even have more than one tutor. Just like, I mean, imagine if you were an elite professional athlete. Let's say you were an elite professional tennis player or a golf player or a cricket player. You would typically have about five or six coaches. You would have a coach for conditioning. You would have a coach for stroke play. You would have a coach for mental wellness and so on and so forth. You would have coaches for all of that. You can do that because your earnings allow you to do that. There are very few people who can afford it. With generative AI, I think personal coaches of very high quality and caliber are going to become more easily and more affordably available. That is going to change very significantly how training is done. It'll get done very much more in the flow of work. Imagine if you were going into a meeting where you had to give feedback, hard feedback to somebody. What if you could practice with an impersonator who represents the person that you are going to talk to? You could have a practice meeting ahead of that meeting. The point I'm trying to make is that training is going to become significantly more personal. Training is going to become more coaching-oriented, and training AI is going to be all pervasive. Now, will that happen tomorrow? Probably not. Will that happen over the next few years? I'm certain it will. How are we looking at business going forward? I think the significant changes that we are hoping to drive is to bring to our customers very different, very value-adding learning experiences which accelerate learning for our customers. What used to take—for example, if you are fresh out of college and you're getting into pretty much any profession, today it takes three to six months to get you onboarded into that profession. We think that with AI, we have an opportunity to significantly shrink that onboarding time. Likewise, we think that we'll have an opportunity to help reduce the mistakes people make when they do their jobs and make them more proficient in a shorter period of time. I could go on, on this for a long period of time. I think it's going to be profoundly different. I think companies who do not embrace it soon enough will not be relevant going forward. I think the reason why we are making such investments is because not only do we want to be relevant, but we want to lead. Thank you, sir. Thank you for elaborating on it. Thank you. Next question comes from the line of Ganesh Shetty, an individual investor. Please go ahead. Good evening, sir. Sir, our previous acquisitions like Eagle Solutions and Centalliance, where we have bought significant controlling stake. But now, in recent investments like Strivr and In no Energy, we are investing in a very small proportion. Is it that we are using our capital very judiciously, or we are just trying to understand the uncertainty around that? Or is there any change in our inorganic expansion strategy? Can you please throw some light on this? Yeah. I'll give you one high-level answer. It's a coincidence that the last two have been minority investments and the previous were controlling stake. When we make most of our inorganic activity, it is actually across controlling stakes, and that's why we have the quantum that is allocated in our balance sheet or capital allocation that the board has done. In these two cases, coincidentally, these have been minority investments. The minority—we do make minority investments when the overall business of the target company is not core to us, but a specific capability or a specific part which can make a big difference to us. Their overall business may or may not be in training alone. It may be beyond training. I think Sijapnesh will explain to you Inno Energy, how Inno Energy—we took a minority stake, and by the way, how it is helping us. Similarly, how Cyberlabs, as a minority investment we have made, how it is not exactly a full core activity where we would like to bet our full bank on that, but take a positioning so that we have access to that technology in a competitive manner. I think Sapnesh, you can explain that. Thanks. Thank you again. I would completely agree with what you said. I would echo it. See, Ganesh, our thesis for acquisitions is around three dimensions. The first dimension we consider is, are we going to be able to get a new capability by acquiring a company? The second thesis is, are we going to be able to get access to a new segment of customer? And the third is, are we going to be able to get access to a new geography? What we try to do is, in a full acquisition, ensure that at least two out of these three are checked. If you look at Eagle, we were able to get new capability in life sciences as a market segment, as well as a new capability in doing application rollout. If you look at Centalliance Consulting Group, we were able to get new capability in consulting and advisory services, as well as access to a new market segment where we were not present, which was the management consulting and professional services companies. There are, however, a number of companies who may not check two or three out of our key criteria, however, still represent investing opportunities where we may have intersection with some of the customers that they might have, or we may have intersection with some of the initiatives that they might have. However, it may not make sense for us to make a full acquisition. For example, the minority investment that we made in Inno Energy, now, as you know, Inno Energy is really a large fund that invests in early and mid-stage startups that are around renewable energy. We have energy as a key segment, and I think renewable energy is a key transformation that is going to drive a lot of what is going to happen connected to energy in the future. We think that this transformation will succeed if and only if there are enough trained people to service that transformation or transition. For example, this will lead to manufacture of electric vehicles. It might result in setting up of hydrogen plants. It might result in large-scale setup of wind energy or solar energy. All of this will require a lot of people who will need skills to be able to bring the dream of renewable energy to life. Having invested in taking a minority investment in Inno Energy will get us a seat at the table with companies who are driving this transformation. Likewise, as I mentioned, artificial intelligence, different ways of learning, virtual reality as it connects with artificial intelligence create new modes of learning that will drive how students learn in the future. By taking a minority stake in this organization, it will give us a seat at the table with organizations who are pushing the boundaries of how learning happens. We make minority investments where the investment does not check all three boxes that we have for full acquisition, but are still interesting because either we can learn or we can get access to customers or we can get a seat at the table that's very desirable. Thank you, sir. My second question is, earlier we have guided for 20% growth and 20% EBITDA margin. In spite of difficult macro, we have achieved 20% EBITDA, but the growth is not coming. Do you think that in near term or in the medium term, as many acquisitions are lined up, we can achieve 20 plus trajectory in the near future, sir? Thanks, Ganesh, for asking that question. I think, like I pointed out earlier, we have seen a little bit of pullback in growth to some extent because of the uncertainty, but also because of the netting effect that I pointed out earlier. Our medium-term, long-term point of view continues to be a 2020 point of view, and we will do our best to get to the 20% growth mark as soon as we can. Some of the inorganic activity will certainly help in that direction. Thank you very much, sir, and all the best for the interview. Thank you. Thank you. Next question comes from the line of Shantar Narayanan from ITOR PMS. Please go ahead. Good evening, sir. My first question is regarding the healthcare and life science vertical and tech and telecom vertical. If you could see the recent job employment report, specifically in the U.S., you could see a strong hiring momentum in healthcare and life science vertical. That is not reflecting in our quarterly numbers this quarter. If you could throw some light on what happened in that vertical. Also, regarding the technology vertical, tech and telecom, we could see news regarding layoffs in Microsoft, Google, and Meta. How can we expect this vertical to be a growth vertical in the upcoming quarter? I think your second question—I couldn't quite understand your second question. Can you say it one more time, please? Isn't the job or? Sir, we have seen news regarding the layoffs in. I'll point out. Okay. Let me answer the second question first, and then I'll come to the first question. I think your second question was that a number of technology companies are laying off people, and how do we expect to grow in an environment where a number of technology companies are laying off people? I would say if you go to the core of the issue, if you go to the core of the issue on why technology companies are laying off people is, to one extent, uncertainty, and the second extent is the rapid change that's going on with the technology. As technologies change, there is obsolescence of skills. I think when there is obsolescence of skills, people who do not keep up with the skills end up on the short end of the stick. I think this rapid change in technology will create actually more opportunity for us because while organizations will end up with fewer employees, the employees who are left will need to be continuously trained, and we will see an opportunity of increased training consumption for the employees who are left at the organization. I think also, as cost becomes important, large technology companies will resort to outsourcing. It will be beneficial for us. I think while we have seen significant growth this past couple of quarters in our technology segment, we should see continuous growth as we start doing more with technology customers. That is actually going to be a focus segment for us. The second question was that there is an increase in hiring in healthcare and life sciences. I guess you're saying you're seeing that happen because the world is getting older and requires more help from a healthcare perspective. We've seen year-on-year growth in healthcare over the last few years. The top, I think, eight or nine out of the top 15 pharma companies are our customers. Over the last two years, we ramped up in a significant way. Even as I look at the years that went by, we saw 4% growth in our business in life sciences. We have some of the largest pharma companies as our customers, and I think our business will grow in pharma. In fact, one of the two contracts that we signed this quarter was with a large pharma company. Okay. So that's my final question. My second question is regarding one of your stories of content creation. With regards to generative AI, it could be able to generate the content without or with lesser human assistance. How could we see the content creation vertical? I know that generative AI can leverage this segment, but how you could see because eventually you are needing lesser human assistance so that when customers ask for a price discount or you will see a pricing pressure in this segment because that's what many industry analysts, like even Bill Bush, he was saying regarding this content creation. Just your thoughts on this. I think it's a very good question and a very appropriate question. See, like I pointed out, if we kept doing the same things that we've been doing, AI will be able to do it almost for free. However, I think the opportunity we have is to create more effective training that results in better outcomes. I think this is really what we are hearing from our customers. Our customers don't want to dramatically reduce their spend on training. I mean, there are times when it's tough for them and the budgets go down marginally. There are times when the budgets go up marginally. If you look at data for the last 20 years, and L&D has gone through many transformations over the last 20, 30 years, the average spend on training per employee has hovered around about $1,100 over the last 30, 40 years. Organizations do believe in the value that training generates, and they don't want to very significantly lower the training. However, the expectation on outcomes from training is going up and should be going up because we should be able to leverage generative AI to improve the outcome. My belief is that—and we classify content in level of complexity or level of interactivity or outcomes it can generate at level one, level two, and level three. I believe that going forward, our opportunity in level one content creation will diminish significantly because you really don't need to create that training content. If training was just informational, you could just as well go to GenAI and not have to go to a training class at all. Training will specifically focus on higher-level outcomes, and I think that's where our opportunity will shift. Thank you, sir. That is my final question. My last question is regarding your long-term guidance of achieving $400 million-$500 million. Yeah. Sankaran, there are a large number of participants. I'm going to request you to rejoin the queue. I'll request everybody else to limit their questions to one and then come back in the queue if there are more. Sure, sir. Thank you. Thank you. Thank you. Once again, a request that given the large number of participants, please restrict yourself to one question, then fall back in the queue in case of additional questions. Next question comes from the line of Shwetha with Amseq. Please go ahead. Yeah. Hi. So just on the guidance for FY2026, we saw that in FY2025, because of macros, through the quarters, we had to cut down the guidance. What is the confidence level in terms of FY2026 guidance? What has it baked in terms of macros? Is the guidance baking in any digitization in macros? Any cancellations that might come up, given what is happening at the macros and guidance, and how our existing plans are talking of in terms of their spending patterns? Pulling together this guidance was really hard this quarter. It's been harder than it's been for the last several quarters. We've tried to do as good a job as we can, but our ability to gaze on the crystal ball is only so good. Things seem to be changing on a daily basis. We will continue to reevaluate our guidance on a quarterly basis. We have baked in what we know. We know that our contract with the North American real estate business will end in June, the rebate pattern. We've baked in the pipeline and our expected probability of winning from that pipeline. We've baked in some conservative estimates of what our existing customers will spend with us. We've tried to be as data-intensive as we can be, and we've tried to be as transparent as we can be. What the guidance reflects is our view today. Will the world change as rapidly as it has changed over the last three months? Time will tell. We have tried to do as fair and as objective a job coming up with the guidance as we could. The guidance does build in the assumption that whatever we have in pipeline, some closures would happen, and ramp up of that will take care of the guidance of 10% growth. That is correct. Right. On the margin guidance, on the 2021 margin guidance that we have for this year, should this be treated as a new normal for margins, or is this just a 26 guidance on margins, and going forward, should we look at some improvement and coming back to the 2024-2025 average level of margin to 20%-24%? See, like I pointed out earlier, both for revenue and margin, this year will be a little bit of a transitioning year. I think things will settle down by the time we get to the fourth quarter of the year. I think then on, we will get to a steady state. The first few quarters of this year will be transitionary in nature. Like I pointed out, long-term, this business is a 20-20 business. We hope that we'll be able to get to 20% growth as certainty comes back. From a margin perspective, we think that it should be in the 20%-22% range this year. This coming year, given the netting effect, we think it will be 20%-21%. Over time, we may have an opportunity to go beyond 20%. Okay. Sure. Thanks. That's it from my side. Thank you. Thank you. Thank you. Next question comes from the line of Ankur Shah with Carsell Capital. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, just one question on the business. Sir, when we mention about cancellation of contracts or, sorry, cancellation of training, what do we mean? That it is a scheduled training which has been canceled and the related outsourcing costs which we had committed, we have to pay them, or are our costs also variable subject to the cancellation or the scheduling of the training? That is something I'm a little unsure. The part that you mentioned about cancellation of training is accurate. In times of uncertainty, a number of organizations have to give up their budget, and in turn, that results in cancellation of classes that are scheduled or that are on the calendar. Now, in terms of expenses, all training that we deliver is not outsourced expense. It is not variable expense. A fair part of our expense is variable. However, a large part of our expense is also fixed. The part that we cannot recover is the fixed expense. The fixed expense results in cancellation of classes that have fixed expense allocated, resulting in lower utilization of headcount as compared to what was planned, and therefore results in margin depletion. What was to be outsourced often does not need to be outsourced, and therefore there is not margin depletion. That's the reason why I made the comment that as we look ahead, we will have higher variability in our business given the uncertainty. Is that variability component driving slightly lower guidance in margins? Fixed costs, when utilized to the maximum, result in lowest expense. Variable costs come at a premium. Variable headcount, variable staff come at a premium. If 100% of our cost basis was variable, then our unit cost would be higher because you would have to pay premium for that. Got it, sir. Got it. All the best. Thanks. Thank you. Thank you. Next question. We have time only for maybe one or four people. One question each. Okay. Go ahead. All right. Next question comes from the line of Venkat with Mirabilis Investment Trust. Please go ahead. Thanks for taking my question. My question is regarding the RE deal, real estate deal again. You mentioned that the deal is converting into non-exclusive basis. Are we planning to bid for the deal in this non-exclusive basis, or will the deal ramp down to zero from next quarter? We have assumed that in the guidance that we have provided, we've assumed that it will ramp down to zero. We are in conversations with a number of players who are likely to participate in the deal. Just so you know, and this was true when we won the contract seven years ago as well. To be able to be a partner, you have to be an accredited college. In our first go-around, we partnered with one of the accredited colleges, and that's how we were able to consummate the deal. As I mentioned earlier, it's going to move from exclusive to non-exclusive. A number of colleges are going to be in the fray. We have discussions on with some of those colleges. If we get selected, we may have some participation, but we have assumed that it will come down to zero when we provided the guidance. Okay. On your long-term guidance of $400 million-$500 million by 2027, do you think that goal is far-fetched, or do you believe we have enough acquisitions in the pipeline to reach anywhere close to that? Our goal is to get to $400 million-$500 million by 2028. It is, as we have given that we have not grown at 20%-25% year on year over the last three years, the climb has become harder. I think with the strong balance sheet we have, the opportunities we have, I think we still have a chance. Thanks. That's all. Thank you. Next question comes from the line of Pranay Jain with Panentry Advisors Private Limited. Please go ahead. Hello. Am I audible? Yes. Hello. Yeah. So when is the Ontario contract getting over? June of 2025. Okay. Okay. And secondly, you used to give out top 5, top 10, top 20 customers' revenue mix. Can you please share that with us? Yeah. We'll be happy to. Yeah. Yeah. Thirdly. I'll be able to. We'll be able to share it with you. Okay. Okay. Sure. And thirdly, so are the margins for the AI-related contract at same levels as that of company-level margins? We don't comment on margins for specific customers, but we believe that the AI contracts will generate same or better margins. Got it. Got it. Sure. That was it from my end. Thank you. As it's mentioned in our results data sheet, those numbers are provided already. If you could have a look at that. Thank you. Next question comes from the line of Janish Shah with Investment Professional. Please go ahead. Yeah. Thank you for giving the opportunity again. Just to get some understanding on this AI, I mean, you clearly mentioned that a lot of part of commodity or a bit repetitive training is going to get replaced with the machine. In this transition, how do we see, so generally, today, if you're talking about the cost advantage which you have been mentioning is around like 40%, which is making the outsourcing more sensible with the client. In an environment where the AI transition is going to happen, what choice does the customer will have? Do they have this, I mean, because the cost advantage is going to evaporate or reduce significantly, and as you mentioned, there's going to be a level up which is going to happen from your side. Does it mean that the opportunity client budget basically will get shrink because of the AI, or the cost of training per employee, as you mentioned, about $1,100 has remained for decades? That's going to change. I mean, profitability you mentioned, but I'm just trying to understand the outsourcing. I mean, will the clients go for an outsourcing, especially when the industry level total outsourcing is barely minimum right now? Do you see that the transformation for the client from being an in-house to an outsourcing, it still makes sense in a changing environment? That will help in understanding the landscape. Thanks. I think you had two or three questions mixed up in one. What I would say is, one, people do not outsource because they are looking at somebody else to do the same thing that they were able to do internally. People outsource because organizations want to achieve better outcomes as compared to what they are able to create internally. That is the reason why many organizations choose to outsource what is not core to them. When I say what is not core to them, customers in oil and gas, what is core to them is exploration. What is core to them is drilling. What is core to them is refining. What is core to them is distribution. Training is not core to them. Therefore, to be able to become the best in the world at training is not very advantageous for them from an investment perspective. What do they do? They look at organizations who can reliably support them for training and be able to bring the best in the world to their employees so that their employees can get the skills that are so important for them. While they are doing that, they also are able to get benefit from the skill that their partners have and therefore save money. It is not the cart before the horse. The reason why organizations outsource is because they do not want to invest in areas that are not core to their business. Now, AI will fundamentally transform training, just as 30-40 years ago, advent of electronic training or e-learning or digital training transformed the training industry. Industries go through multiple transformations over their life, but that does not affect them. Like I pointed out, organizations have been spending about $1,100 per employee for many, many years. Sometimes it goes down to 10, 50. Sometimes it becomes 1,150, but it does not change to 300. I think we should now focus on the last question. Thank you. Thank you, sir. Mr. Shah, are you done with the question? Yeah, I'm done with it. Thanks. We'll take the next. That is Deepak from Sundaram Mutual Funds. Please go ahead. Yeah. Good morning, everyone. Yes. Thanks for the opportunity. Sir, I had just one question regarding your sector performance. If I look at this quarter, the management consulting and professional services vertical has shown a good comeback. On QOQ basis, we have almost 25% plus revenue growth. I just wanted to understand, has the volume in management consulting come back, which was kind of subdued due to business environment and push for cost reduction, or is it that the volumes in management consulting still remain subdued, but because there could be a one-off which we booked in this quarter because of our advisory and strategic consulting revenue? There are two parts to my answer. See, there is a seasonal impact to our consulting and advisory practice. It typically does better in Q1 as compared to Q4, predominantly because a number of the customers that we work with take vacation time in our Q3. Now, this is contra to several other customers who try to consume their budgets. As you might know, for a number of Big Four and management consulting firms, they do not follow a calendar year as a fiscal year. They have mid-year fiscal years, whereas a large majority of our customers have calendar years as fiscal years. Consequent to that, we have a seasonality in the consulting and advisory business, and we see a quarter-on-quarter increase when we go from Q3 to Q4. That is one reason. I would also say that while last year we saw budget cuts across most of our customers, this coming year, it looks like we are turning the bend, and we are likely to see growth. Okay. So there is an element of season, and there is also you are seeing some green shoot in terms of L&D spendings by the Big Four. That's it. Okay. So if you allow. Now, one more question. Okay. All right. Okay, sir. Just to double-click on one of the early participant questions as well, this cancellation part, you explained that there is a fixed component to it, and there is a variable component to it, right? Wherever there is a fixed component, obviously, if the new customer doesn't ramp up his contract and you have fixed expenses for that contract, obviously, your margin gets pulled down, correct? If I look at your P&L, most of your expenses, spiking expenses, come from this professional technical outsourcing expense, right? Which is mostly variable in nature, if I'm not wrong. I'm not able to understand where is the fixed part coming from this professional and technical outsourcing expenses, which is impacting your margin because of slower ramp-up of new customer and cancellation of existing training schedules. It will be hard for you to discern it from a P&L because there is netting. On one side, we are seeing ramp-up of a customer, and as we ramp up the customer, we have higher outsourced expenses to ramp up this particular customer. Like I pointed out, as we ramp up the customer, until we get to a steady state, we like to keep our costs variable so that we get to fixed costs once we have realized the consumption patterns. That is one part of the answer, and that is why you see a spike or an increase in variable costs. On the other hand, we had allocated fixed costs to a number of classes which got canceled, and those fixed costs could not be utilized given the cancellation. We had utilization problems, or we had idle time issues because of cancellation on one side, and we had ramp-up costs which were variable in nature on the other side. Now, the reason why we can't net off each of these is because, I mean, an easy question could be that if you have people who have utilization issues on one side, why the heck would you spend money on outsourcing? That is because there are different skills that are needed to address different customer needs. One customer might need Red Hat skills. Another customer might need AWS. Somebody else might need some other skills. It is not like to like. We couldn't exchange folks who had utilization issues with folks who we were outsourcing. Did that make sense? Just to clarify on that, for example, let's say the new customer who was supposed to ramp up as expected in Q4 didn't ramp up, right? Is it that the trainer whom you have recruited as an outsourced agent to teach your customer, you paid that trainer in advance, and that is where one of the. We did not lose on outsourced expenses. Our margin is not lower because we had unutilized outsourced expenses. The reason why we have variable costs is if we do not have utilization, we do not have to incur the expenses. Like I pointed out, we had one customer who was ramping up. They did ramp up quarter on quarter in a significant way, but did not reach the peak that we were expecting them to reach. However, from a cost perspective, that is not what hurt us. It is not like we were paying contractors for not doing work. We paid them, and they did the work. However, the outsourcing expense was higher compared to previous quarter because we saw that customer ramp up. Okay. Got it. Thank you. I think we are up to time. If you need more clarification, do get in touch with Kapil, and he'll be happy to have another discussion with you. Thanks for taking the time, everyone. I know it's a busy schedule for you. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to hand the conference over to the management for closing comments. Thank you. Thanks a lot for joining the call, even though it went on for a little bit longer than we had planned. We learned a lot from your questions, and we get a lot of insights, and we would love to continue this dialogue as we look ahead. Thank you. On behalf of NIIT Learning Systems Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.