CL Educate Ltd

NSE:CLEDUCATE

Earnings Call Transcript 2022-Q4

[Unknown Executive]

So we'll start with the Q4 and our annual results. Arjun, could you go straight to slide -- relevant slide first, the financial update. Okay.

In snapshot, FY '22 was still a significantly COVID-impacted year, with a lot of on-ground and physical business shut down for a large part of the year. It was only in the last quarter that the physical operations did start at most of our educational centers beginning end of January or early February.

Despite that, if you look at our business, the revenues grew about 13% from about INR 192 crores to INR 216 crores. Our operating EBITDA increased from a loss of INR 10 crores to a profit of INR 20 crores, and our total EBITDA increase from a loss of about minus INR 1 crore to a total positive EBITDA of INR 29.2 crores. And PAT increased from a negative INR 12 crores, that's a loss of INR 12 crores, to INR 14.6 crores.

So the last 12 months have seen a significant turnaround in both business growth as well as business optimization in terms of efficiency, efficacy and delivery throughput, resulting in margin expansion and, resultantly, a significant jump in both EBITDA and PAT.

So if you look at -- some of the key parameters have already covered the movement on revenue, EBITDA and PAT. I just want you to focus on the next 5 lines.

Our net cash position increased from about INR 26 crores to INR 47 crores with -- regenerating a free cash flow of INR 27 crores during the year gone by as compared to INR 22 crores in the year, March '21. Our ROCE and ROE also showed a dramatic turnaround, with ROCE increasing from minus 3.5% to 7.7% and ROE increasing from minus 4.7% to 5.3%. Though these are still far short of what the benchmark we have set for ourselves, but I think sound turnaround on this direction has happened, and we expect a significant improvement in the coming 4 quarters as we move forward in FY '23.

As I shared in the last slide, our net cash increased by about INR 20-odd -- INR 22-odd crores from INR 26 crores to INR 47 crores, which was predominantly driven by a sharp fall in the total borrowings of the company by about INR 26 crores from INR 43 crores to INR 17 crores, and we are broadly on track to become a 0 debt company by end of December '22. So we have set ourselves a goal of becoming a 0 debt entity. We are already net negative debt company, but we want to be a 0 debt company by December '22. And as per current trend, we are well on track to achieve that goal.

A brief update on business in terms of quarter-on-quarter and year-on-year movement. Our quarter-on-quarter revenues saw a 6% jump while an EBITDA saw a 16% jump and PAT saw a 56% jump. Y-on-Y, we saw a 16% growth on revenue. EBITDA and PAT are not strictly comparable because of loss in the previous year. I think we have COVID strongly behind us, and we are now back on track for a sustained, steady revenue and profitability growth over the next 4 to 6 quarters.

We have had significant new products, both in EdTech and in Metaverse and our MarTech business, which we'll cover separately in the subsequent slides, which have given both a boost to the top line as well as the higher margins, and we expect that to be sustained over the next coming quarters. Arjun, could we move to the next slide, please.

Here are the segment-wise results. Quarter-on-quarter, EdTech business saw a revenue growth of 36%, while the Segmental profits saw a growth of over 100%. MarTech profits saw a decline of 27% quarter-on-quarter, however, that was predominantly because of a technical reason that because our merger came into effect in the first week of March, and we have to re-register our GST numbers and we had to undergo a re-registration of [indiscernible] registration with the new GST process with most of our B2B corporate clients. As a result, we were unable to do any billing to the customers in the month of March, which has clearly reflected that we had an unbilled revenue of INR 7.7 crores in March as compared to INR 1.7 crores previous year. That process got completed in the month of March and the billing is now happening, and we will see this a short-term blip getting rectified in the first quarter. And I think this negative thing will, over a 12-month period, which is a culmination just at the end of the balance sheet period. But over the next 12 months, we'll see a sustained and continuous revenue and profitability growth in the MarTech business over the next 4 quarters.

Yes, Arjun. Here, a brief summary of how our MarTech business performed. Our Singapore business grew by about 50%. We added 20% new clients, and we expect them to scale up in the coming years. We have done 25% more business in the lead gen CEP business. It is scaling up faster than ever before. We would have recorded a 20% higher revenue if -- just -- which we could not invoice because of the implementation of the merger order. However, with that thing behind us, I think the positive trend of client accretion and new revenue generation will gain momentum in Q1 and Q2, and we'll expect a much positive growth happening in the coming quarters.

Arjun, could we move to -- our International business has been showing positive growth. Full year, we grew by about 50% from roughly $2.5 million to close to $3 million, less than $2 million or close to $3 million. EBITDA was up 70% and margins are also positive, and we are seeing good traction happening especially in the APAC region over the last 4 quarters.

We have formally launched our VOSMOS brand on the Metaverse, and we are getting -- gradually beginning to get new and new brand sign-ups on the VOSMOS Metaverse platform. We are upgrading technology and building the technology blocks and blockchain, virtual reality and augmented reality, to offer more and more products and services on the -- in the Metaverse for our customers. As we speak, we have about 8 to 10 customers who are live on the Kestone Metaverse platform, and I think we will have many more customers coming up over the next 2 to 4 quarters. We have bolstered our sales team in U.S. We have added salespeople in APAC and in India, and we are looking for an outreach growth in both Indonesia, Malaysia, and also Middle East with dedicated sales resources, and that should be a positive fruit over the next 4 quarters.

Here are some of the snapshots of some of the events which we hosted for Cisco, Microsoft, Frost & Sullivan globally over the last 2 quarters. That has gained significant acceptability globally. And while things are beginning to reopen and we have seen the return of the physical event, we are also seeing that more and more customers are now beginning to lookout for hybrid events, which have physical participation and virtual platform integrated into it. And we clearly feel that's the way it's going to be in the event space going forward. Hybrid events are going to be the call of the day. And I think we are present in both physical events and in the virtual event space reasonably strongly to be able to capitalize that opportunity.

Now, I invite Satya to talk about the EdTech business. Satya, over to you.

[R. Narayanan, executive]

Hi, everyone. So let me move into the main 2 or 3 points around which I'll center my commentary on EdTech.

Moving forward, the first thing is about -- am I audible, Arjun? Arjun, am I audible?

[Arjun Wadhwa, executive]

Yes, you are. Please go ahead.

[R. Narayanan, executive]

Thank you. Thank you. Thank you. Okay.

I think the first thing and perhaps a theme that you're likely to be hearing a lot over the next many quarters hopefully, is the CUET. Let's stay on the previous slide itself, Arjun, for a moment, please. Yes.

As you would have heard or followed, the initiative called the Central Universities Entrance Tests started its journey about 4 quarters ago, and it is already undertaken 2 or 3 pivots. And now it's not called Central Universities Entrance Test, it is called Common Universities Entrance Test, which means not just central universities, which are 54 of them, but 45 out of those, while they have enrolled into this undergraduate single test entrance exam, that number has gone up to 80 plus. And last night was the closure of application process, 85 universities are taking it in the first round. And the -- as you can see here on the slide, over 10 lakh aspirants had applied a week, 10 days ago. The final closure numbers aren't there with us, but it's likely to be anywhere between 14 lakhs to 15 lakhs that would have enrolled for this test, which makes it amongst the biggest flagship undergraduate program in the first year itself.

This has domain subjects such as within Commerce, all the 4 subjects, Economics, Accountancy, Business Studies, similarly Sciences, the [ MPCB ], Humanities, History, Political Science. Along with that, 2 aptitude, English and General Aptitude. These are all there, so it's a very large opportunity. And as you can see on the slide, we have begun our journey. And as I speak, we already have about 1,400 enrollments in this. This can be a 1-year program, 2-year program for kids in Class 12th and Class 11th, and it also can have the crash program like what we have now for the July thing.

So it's a very interesting long-time opportunity just like the GaoKao in China, which had over 1 million crores students taking the exam this year. This Indian flagship exam can go to numbers such as 60 to 75 lakh takers in the next 2 to 3 years in our view. Not only that, this is likely to become a global product in education from India, wherein the students who want to study in India, that number which is going to go from 50,000 to 400,000 over the next 7, 8 years. So all of those are likely to happen in this. That's a little bit of a macro commentary. This -- our programs are getting rolled out, enrollments are happening. The deliveries have begun to happen.

This slide, as you can see, mentions the key 14, 15 subjects that we have offered. And the competition here is going to be practically anyone who's doing a UG test preparation will jump into this, which means that the competition here is going to be coming from both the IIT, JEE and NEET people because there is some bit of a threat that they will face. And also from the aptitude players who are preparing for Law or MBA or GRE or IPM kind of programs.

So this is likely to be a very important opportunity. We are focused on it. And as you can see on the screen that includes my face and Arjun's face, that's our dual role. We're teaching here finance and psychology in what has been launched as a self-paced program that the students can enroll and learn anytime, anywhere kind of a pedagogy.

Moving forward, the other thing, like Nikhil mentioned in his opening commentary, the physical centers have opened up. The digital is there. I think the new reality is going to be a very effective mix and blend and synthesis that you as a service provider has to do between what needs to be there digital and what needs to become physical, that the physical thing is going to be real, pure online takers will continue to be there as they were in the pre-COVID era. Empirically, those numbers are between 13% to 30%, depending on which segment you're talking about. So there is going to be a significant number of 70% to 80% of the parents or students who are going to seek face-to-face, CL is ready and all centers are up.

Not only that, we are of the view that the distribution, which is straddling a great mix of offline and online, is the secret sauce that CL has in the form of business partners. And with CUET coming in, practically any district, any town that has got half a dozen schools becomes a place of distribution point through a partner network for CL. We are underway in this. Our next big goal in the next 36 months is that can we go from 100 locations to 600 locations. The Delhi intensification of distribution as a plan is underway. And this is how, as you can see the Delhi graph that we have put just for the sake of illustration, there could be half a dozen mega centers where all programs are available, but there are going to be local and hyper local centers, which can just bring a smaller bunch of programs because they are catering to youngsters who are in Grade 10, 11 and 12, and they need to have a center nearby maybe a couple of kilometers from their homes.

So that's what we are focused on as a EdTech growth strategy as we roll this out and generate numbers, you will hear it from us from quarter-to-quarter.

Another important initiative, and like I mentioned in the previous slide and this slide, it's not about numbers, it's about qualitative commentary. Given the Metaverse adoption that we are beginning to see and we have a little bit of an advantage being in the same office space as Kestone, and Kestone is doing it for various domain leaders or industry leaders in [ fashion ] or banking or financial services or consumer products. CL, as an EdTech company, is working as a beta customer, and we want to be the first EdTech company that embraces Metaverse in which counseling, if you look at the top end of the slide, all the activities that take place in a physical world will begin to be available in the Metaverse form experience very soon, including counseling, product awareness, enrollments, in-class experiences, including marking your attendance, making -- taking mocks and so on inside the CL Metaverse platform over the next couple of quarters.

What we believe this can do is to enhance the consumer experience and create a differentiator which perhaps could be very valuable as we move into the future quarters. I'll skip some of the details on the right-hand side of it. Yes, yes, that's fine, Arjun.

So one of the observations that we have seen, and we are observing this, and we -- as a business, we want to stay equally excited or equally dispassionate about what is online and what is offline. Because our experience over the last couple of decades tells us that you cannot force a student who wants to take a program online to go offline. Doing that could be counterproductive. And it is true, the vice versa is true as well. When the student wants to have a high touch, for whatever reason, reasons of discipline, get out of the homes, meet friends, the reasons could be many. A student who wants a high-touch program and willing to pay a premium for it at the nearest CL center, we have a program for that kind of a need also.

Given that, we are seeing a lot of runoff and keenness to enroll offline, which is leading to our ARPUs getting higher compared to the previous 3 or 4 quarters. The MBA, Law, IPM, i.e., all those numbers are up compared to last year, which is not necessarily the best comparison. So what we are comparing internally are with the 2020 and 2019 numbers. Opening up of universities and colleges and the new admission season that is gathering momentum, all of these bode well for us as far as EdTech or Test Prep revenues are concerned.

Going forward, we think that the MBA and Law, and you must be aware of the deal that has happened with time, our primary competitor as far as MBA is concerned has been acquired by Veranda, the new listed company. We believe that's an opportunity for us. We are focused on how to enhance our market share in MBA. Law and IPM, when you combine them with the domain subjects coaching for the board exam and CUET, give us an opportunity to enhance our ARPUs, the wallet -- the share of wallet that we can pick up from the same customer by adding additional products is an interesting opportunity. We are the only Test Prep player who has gone beyond the attitude subjects of CUET. We are offering, as I mentioned earlier, 14 domain subjects: Accountancy, Economics, Political Science, Physics, Chemistry, Maths, and that's a very interesting door opener for us to integrate downwards and look at 12th and 11th, and then come to the 10th board-related subject prep over the next 36 months.

Significant improvements in publishing business also has been noticed. And as you are aware, in order to manage the inventory and related things, most of our work happens with online distributors and also on the basis of print-on-demand rather than print and keep the inventory. And the margins have been okay, healthy this year compared to the previous years.

Moving forward is about a little bit of an update about the corporate action. I'll request Nikhil to come and take the next 2 slides. Any questions about the EdTech business, I'll be happy to take once Arjun opens up the Q&A part of the session.

[Nikhil Mahajan, executive]

Thanks, Satya.

So finally, the merger of the [ 5 100% ] subsidiaries of CL Educate, finally got NCLT approval in February. And all the paperwork and processes, et cetera, got completed by end of March. So this time, we reported a single [ merge ] consolidated entity for our March numbers, so that was one.

Second, we were successful in liquidating 3 parcels of land in the last fiscal year. And we are currently -- we have successfully closed a deal for the sale of our Greater Noida parcel of land and building, which we expect to close over the next 90 days. We have already made the necessary disclosures, and we expect to release a significant amount of cash as a result of the Greater Noida piece of real estate going away.

We have announced a stock split in the month of August, September last year, which came into effect from first of October. And now at the end of the last Board meeting, we have announced a buyback of shares at a price of INR 170.

So the key features or the key pointers of the buyback, the total amount of maximum buyback is INR 10 crores. The buyback price is INR 170. The first day, the buyback will start is this Friday, 27th of May. And we are offering the buyback at a 31% premium over the last 90-day average monthly closing. So these are some of the key highlights and directional pointers of the buyback.

And some of the rationale of doing a buyback was to return surplus cash to the shareholders, improve ROE or ROCE, and let shareholders decide in terms of whether they wanted cash through this route or via capital gains. This -- we expect a 30 to 40 basis point improvement in ROCE just because of the buyback. The total free float will reduce by 2.1% to 2.2%, and ROE improvement will be 25 to 30 basis points. So in nutshell, we from the management clearly agreed and outlined that the company, your company -- the price is significantly undervalued. And in the short term, we clearly feel that INR 170 is a bare minimum price level, and we expect shareholders to come forward and exercise the opportunity who think they want an action to [ exit ] at this price.

I think that's the end of it, and we'll be more than happy to answer questions, right.

[Arjun Wadhwa, executive]

Thanks, Nikhil. I'll throw the floor open to questions. I see a few already popping up on our chat window.

There's a question from Vikram Mehta. How are we growing in comparison with competition, both locally and globally in both businesses? Satya, would you like to take on the Test Prep business first?

[R. Narayanan, executive]

Sure. Yes. Sure, Arjun.

Vikram, I think our view is that while everybody is coming out of the COVID -- what do I call it, pivots or altered strategies that they adopted and then coming out, there are different ways in which people are reading these -- the new signals. And one of the things that we are seeing is perhaps we are in a very good position as CL Educate, they take part for 2 reasons. One is, this entire undergraduate program that has -- entrance exam that has been initiated, it is -- it augurs extremely well for us because the adjacencies to us and the add-ons that it can cost to us for immediate enrollments are very good, and also this is likely to be a 5- to 10-year big opportunity for everyone. So there will be 2, 3 new leaders that will emerge, very similar to the way it was between 2000 and 2010 for MBA or 2008 and '15 for Law.

The second thing is that I think this also could cause a little bit of disruptions in the JEE, NEET space in our view, but I'll keep that for a later commentary. With just one pointed observation that already out of those 85 universities, there are a few of them, universities who have their Engineering programs, who have also begun to subscribe to the CUET exam pattern, and this could be a very interesting thing to follow.

So I think we are in a good place. We should just put our head down and focus on numbers, enrollments and great word of mouth and not let go of the significant competitive advantage that CL has, which is generating student outcomes, results, which is why our [indiscernible] always continue to be among the lowest in the industry.

I'll pause there and let Nikhil respond on the MarTech part of your question.

[Nikhil Mahajan, executive]

On the MarTech side, I think on the virtual platform, we grew over -- by about 3x in FY '22 over FY '21. Our digital business grew by over 100%. Now, obviously, the growth rates in both these [ spaces ] will moderate going forward as we see reopening of businesses, we are already seeing a movement of businesses happening to -- wanting to do events in physical space rather than a virtual space. I think -- but the sustained combined revenues of physical and virtual will continue to show a positive upward tick in the coming 12 months.

The digital business is growing reasonably positively. We grew over 100% last year, and we should maintain a healthy 50% to 60% growth rate going forward in the coming year as well.

[Arjun Wadhwa, executive]

Thanks, Nikhil. Satya, why don't I just run through 2 or 3 questions in EdTech? Shall I read you 2 to 3 questions in MarTech, and each of you can then respond accordingly?

Vivek [ Turaga ] has asked about how do you see Veranda acquiring TIME? Does it help us, or does it make any difference to the landscape? Vivek also has 2 or 3 other related questions, most of which you've already covered as part of your commentary.

There's also a question on the UPSC conversation from a couple of quarters ago, and there's a third question from [ Amit ] about additional revenues from CUET in the coming years.

[R. Narayanan, executive]

Okay. On the Veranda-TIME deal, I think it would only be appropriate for me to say that we look at it as an opportunity to up our relative market share, and I'll leave the rest of it to pan out over the next 4 quarters. The reasons, the justifications could just be our way of viewing at it and need not be public in my view, but I'll pause there on that question.

As far as -- and just to kind of wrap up that point, we have a tremendous amount of respect for the founders of TIME, which is [ Vishi ] and Manek. We're all very good friends for a long, long time, and there aren't many people who run Test Prep companies like that in India, and that's where the opportunity comes from. I think that should leave you with answers.

On the CUET numbers, this is -- okay, let me say this that this policy has taken a decade to come into existence. So if we assume that this is -- this was not a major reaction but a very carefully calibrated outcome of the new education policy which got approved in the parliament 1.5 years ago, and it's been in the making for 14, 15 years. And it strategically addresses the question of where should India be headed by looking at her higher education as a distinctively differentiated product and offering.

If you look at it from that perspective, the offering, the buying, et cetera, has been there right from the UPA days to the NDA days. This is more education-centric, policy-centric than politic-centric. Hence, we believe that this is a very robust education reform, and this will -- this gives us a very long runway to build a very good business with a deep penetration into 1,000 locations in India and 100 locations outside of India. Who does it is a moot point. [indiscernible] could do it, somebody else could do it, somebody else could beat us to it. But CL is extremely well endowed and positively positioned to make this count for a business growth.

On the numbers part, I would only leave you with one statement since we refrained from talking about future numbers as a matter of practice. In MBA, which has a market size of 200,000 CAT takers, CL has a INR 60 crores to INR 70 crores business of MBA. If CUET has 50 lakh takers, which is 25x of CAT in 3 years' time and already, this 15x -- 7x of 15 lakhs, which is 7x of CAT already in its inaugural year with ARPUs comparable or more than CAT, it tells you what is it that is possible, and that is what CL has looked to crack over the next 3 to 5 years. So I think when we look at the bigness of this opportunity translating it into our P&L, our balance sheet, our free cash flows and profits, I would encourage you to look at it as -- in a 3- to 5-year horizon, and that looks very healthy.

I'll pause there on that question, Arjun.

[Arjun Wadhwa, executive]

Thanks, Satya. I'll just also quickly tackle a couple of the finance questions that have come up before I throw it back to Nikhil for the MarTech questions.

There's a question from Rahul on what exactly our service delivery expenses? Rahul, we've added an additional line in our P&L this time, where we've broken down our other expenses into 2 more heads. One was sales and marketing, and another is service delivery. Service delivery now also includes our franchise costs, our franchise expenses, the revenue share that we have with our franchisees and any service costs related with our Kestone MarTech business.

There's also a question from [ Yajath ] about the INR 7 crores that we spoke about of Kestone. [ Yajath ], this was on account of the merger, as Nikhil mentioned, during the course of his presentation. This has hit our balance sheet in the form of unbilled revenue. It's INR 7.7 Cr at the turn of the year. The corresponding figure last year was INR 1.7 crores, and this will become revenue in coming quarters. So only a delay that has happened on account of re-registration of Kestone with clients on account of the merger.

Nikhil, there are a couple of questions on the MarTech business, which I'll throw over to you. There's one from Vivek again. He is asking about our outlook on the Metaverse and VEP, and also our fundraising plans for the MarTech business? Also, he's asking about the quality of the product and where do we see the growth going forward?

[Nikhil Mahajan, executive]

So I'll just -- Vivek, I just like to clarify that we -- our product on Metaverse in the virtual platform addresses specific needs of specific customers. Our Virtual Event Platform enables corporates to do events in a very engrossing -- you're actually seeing this investor conference happening on the same platform, a much lower, toned-down version of the same platform. There is a much higher enterprise version of the platform, which larger corporates use in a very immersive and customized way. And some of the biggest tech names like AWS, Facebook, Microsoft, Google, Cisco, Dell, all are using our platform for their outreach events. And it is not so much about being a tech superpower, but it is more about the ability, immersibility and its relevance of engagement with the customer and the audience rather than it being a tech powerhouse.

So I don't think -- and we are not competing in that space with any of the tech powerhouses. Our product [indiscernible] very niche for a marketing outreach need, and we are just catering to that. So that market itself could be a couple of billion dollars globally and expanding at a pretty fast pace.

On the Metaverse front, we are, again, not competing with any of the large tech houses. We are working with smaller- and medium-sized enterprises and enabling them to grow from a Web 2.0 era to a Web 3.0 era, transforming their 2D digital stores in 3D, Metaverse [indiscernible] stores, enabling business through blockchain, giving their customers a better experience rather than a static 2D view. And I think we are staying close to what we think we are good at and not getting into any headlock competition with any of the big ones. Yes, it requires some bit of outreach for marketing, et cetera. And I think to that extent, we are spending what is necessary to achieve our business growth over the next 4 to 6 quarters.

Our fundraising plans for this platform, we have had a couple of engagements with a few interested investors, but that hasn't resulted in any positive outcome yet. We continue to stay interested and invested with potential interested investors, and as and when something concrete comes out, we'll come back and share the [ relevant growth ].

[Arjun Wadhwa, executive]

Thanks, Nikhil.

There's also a question from Rahul about the revenue for the Virtual Events Platform in this quarter? And what percentage of MarTech revenues are likely to come from the Metaverse platform in a couple of years from now?

[Nikhil Mahajan, executive]

I think the revenue from virtual platform in the last quarter was around $800,000 or its equivalent.

What percentage of market revenues are likely to come from virtual events, such MarTech platforms? Last year, they contributed to something like 30% and -- of the total revenue, 25% to 30%. And I think over the next 3 -- couple of years, we expect that percentage to stabilize somewhere between 40% to 50%. But with physical events or the hybrid events making a strong comeback, where does that needle eventually settle down as for anybody to just -- justify our guess estimate at this point of time, then we'll let the market decide whether it wants more of a physical event or more a virtual event. Whether it settles at a 50-50 or 40-60 or 70-30, I think that will -- that only time will tell over the next 4 to 8 quarters as more and more physical things are reopening and going back to the physical world.

[Arjun Wadhwa, executive]

Thanks, Nikhil.

There's also a question from a couple of people about when we believe we will go back to pre-COVID levels of revenue?

[R. Narayanan, executive]

I think...

[Nikhil Mahajan, executive]

At the earliest?

[R. Narayanan, executive]

Yes, yes. I think we are focused on a lot more as a milestones, a lot longer as perspectives. If it happens a quarter here, a quarter there, half year, half year there, you will find. But the good thing is we have a lot of challenges and pivots that we had to do for a lot of internal as well as external reasons. We are at a good place, and we should focus on very, very exciting 2- to 5-year period in my view from now. That's what we are focused on.

[Nikhil Mahajan, executive]

And just to add one more thing. I think we are focused on sustainable, profitable revenue growth over the next 4 to 8 quarters. And our best endeavor is whatever is the best figure that can be achieved in a sustainable and profitable manner. I don't want to achieve higher growth at cost of [ inprofitability ], and I don't want to either lower revenue growth to compromise on the other part. So we are equally focused on revenue growth as well as being sustainably profitable going forward.

[Arjun Wadhwa, executive]

Thanks, Nikhil and Satya. We'll just take one last question before we wrap up.

It's a question from [ Samir ]. How would you respond to all the big players moving towards physical presence rather than just being present only in the online today?

[R. Narayanan, executive]

I think this is one thing that we have maintained all along, which I also said in my earlier commentary. Arjun, am I audible?

[Arjun Wadhwa, executive]

Yes, please go ahead.

[R. Narayanan, executive]

Yes. Which is that, the -- we as a marketer or a company, I can't decide how the consumer should behave because it suits my model on an Excel sheet to appease or to cater to the investors. Education careers are very serious business and parents and children go a long way to take the model that works for them. So that it will be significantly face-to-face, premium, touch-point driven is something that we always had an hypothesis.

At the same time, there is this number that I did mention in my commentary that about 15% to 25%, 30% of the students in every segment are prone to or intent upon consuming it online for biggest constraints of this or their learning styles and so on. So the -- in the long haul, it will be a synthesis of online and offline. It will be an omnichannel where you use online or digital for a certain set of services for every student, and certain set of services are available face-to-face at the [indiscernible] choice of the student or the parent.

And a lot of people who are now moving into offline is a bit of a reaction towards the evaporation of online students post-COVID going away. And the way they are going about the off-line, I'm afraid it's unlikely to be profitable for a long run, even offline. There is an interesting mix of product, services, costs, marketing, [indiscernible], et cetera, that are needed, which has been cracked by some of the brands over the last 10, 15 years. Those people stand a great chance of doing well, especially if they have mastered the art of straddling the online and the offline at the same time. And CL in our view is doing that reasonably well along with a couple of more players.

[Arjun Wadhwa, executive]

Thanks, Satya. Thanks, Nikhil. We'll wrap up this session here. And as we shared a video recording of this, and a transcribed version of this session will be available on our website in the next 24 hours.

See you all in another 3 months' time, and -- when we come back to you with our Q1 results. Thank you.

[R. Narayanan, executive]

Thank you, Arjun. Thank you, everybody.