NIIT Investor Presentation - August 2016 The Next Frontier
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NIIT Investor Presentation August 2016 The Next Frontier www.niit.com
Agenda
NIIT: Company Overview
• Corporate Learning Group
• Skills & Careers Group
• School Learning Group
Q1 FY17 Results Update
The Next Frontier: Future Direction
The Next Frontier 2 www.niit.com
NIIT: At A Glance
3 35
Million Learners
Lines of
Years of Trained
34 Experience
Business
in Training GURGAON
Headquarters
in Gurgaon,
India
2372 40
NIITians Countries
worldwide
The Next Frontier 3 www.niit.com
NIIT: Business Structure
CORPORATE LEARNING SKILLS AND CAREERS SCHOOL LEARNING GROUP
GROUP (CLG) GROUP (SNC) (SLG)
Rs. 5,679 Million, 56% Rs. 3,326 Million, 33% Rs. 1,063 Million, 11%
Productivity Employability Academics
US, Europe India, China India
• Managed Training Services • Service Sector skills • Teaching & Learning Solutions
• Custom Projects • Professional Life skills • School Services
Percentages reflect share of Net Revenue for the business for FY16, and are rounded to nearest integer
The Next Frontier 4 www.niit.com
NIIT: Our Credentials
20% higher
20% premiums for agents
1/3 We’ve trained 10M Technology
1/3rd of the IT enabled over 10 M
on-boarded for a
workforce in India school children
leading Insurance
company
Reduction of learning Trained over 400 K
25% expenditures by 25% 4 MN 400K school teachers to
Skilled over 4 M
for a diversified students over the last leverage
Health and Well- 10 years across IT, ITES, technology
being company BFSI, Mgmt, Retail,
Telecom sectors
30% 370 B2C education
74% 74% students
Reduced time to prefer learning
proficiency by 30% in centers
mathematics
22 locations with NIIT Math
worldwide for a Lab
global Energy major
Corporate Learning Skills & Careers School Learning
The Next Frontier 5 www.niit.com
NIIT: Capital Structure
Shareholding Total Capital Employed – Rs. 10,423 million
Debt
21%
Promoters
34% Public Cash
43% Equity
8%
79% Net Current
Assets
FII 26%
10% DMF & FI
Fixed Assets
12% Investments*
10%
57%
No of Shares: 165.5 million Net Capital Employed – Rs. 3,733 million**
As of June 30, 2016, *NIIT Limited owns 23.7% of NIIT Technologies, ** Net of cash and investment
The Next Frontier 6 www.niit.com
Awards & Recognition
NIIT received
Dataquest
‘Top IT Highest Rated Training Brand Ranked 4th Best
NIIT Nguru
Training Company to
awarded as “Best
Company’ work for in
Interactive
Award for the India. No 1
Solution Provider”
20th in Education
by ASSOCHAM
consecutive and Training
year
31 Brandon Hall awards for NIIT USA ranked among the
Corporate Training. Earned 8 awards Top 20 Companies in Gold Chief Learning Officer Learning Elite Award
jointly with Shell, GE, MetLife, Zurich Training Outsourcing. for
NA and Westfield Insurance in 2015 the ninth consecutive year
The Next Frontier 7 www.niit.com
Business Overview The Next Frontier www.niit.com
Managed Training Services
CUSTOM CONTENT LEARNING LEARNING
AND CURRICULUM DELIVERY ADMINISTRATION
DESIGN
STRATEGIC LEARNING ADVISORY
SOURCING TECHNOLOGY SERVICES
The Next Frontier 9 www.niit.com
Corporate Learning Marquee Customers The Next Frontier 10 www.niit.com
Skills & Careers: A New Way Of Learning The Next Frontier 11 www.niit.com
Skills & Careers: Expanding Product Portfolio
Current
2007-2012
Software Engineering
1982-2006 IT Banking & Finance
Banking & Finance Business Process Mgmt
Brick
IT
& Business Process Mgmt Management Education
Portal
Professional Life Skills CAMSS
Management Education Digital Marketing
E-Commerce
Explosion of diverse skill needs
Design
Changing learner needs: flexibility, on-demand learning Telecom/Mobility
Retail
Improved speed to market and scalability
Hospitality
Lower delivery cost, better capacity utilization
The Next Frontier 12 www.niit.comSchool Learning: Portfolio And Credentials
Teacher Training 10 Mn +
Students
Math Lab
400 k + Teachers
100 k + Nodes
School Consultancy
24 k + Hrs of Content
Quick School @
Cloud 45 k + Instructors
Private and Government Schools
Private Schools
IT, Web &
Multimedia 16 k + Schools
Cumulative
The Next Frontier 13 www.niit.comImpact Study Conducted by
Share of A grade increased from 38% to 46%
after nGuru MathLab implementation
STUDENTS TEACHERS PRINCIPALS
Grade 10 Examinations
% Respondents with positive rating on overall
experience with MathLab
BEFORE AFTER
The Next Frontier 14 www.niit.comQ1 FY17 Results Update The Next Frontier www.niit.com
Environment
• Global geo-political and economic uncertainty continues. Britain’s surprise vote to leave the European Union weighs on
consumer confidence and investor sentiment (IMF).
• Volatility in forex rates and commodity prices impact corporate decision making.
• US & European multinationals increasingly open to outsourcing L&D; significant opportunities in BFSI and in
Commodities sectors
• In India, while GDP growth has remained strong, uncertainty on timing of reforms continues to impact investment
sentiment. Overall, new job creation remains weak
• While Industry remains optimistic on net hiring, Net Employment Outlook at +35% is weakest since Q4 2013
(Manpower Employment Outlook Survey)
• India's IT services industry projected to lose 6.4 lakh "low-skilled" jobs to automation in the next five years (HfS
Research). However, increasing pace of shift in demand for the IT services sector to digital services expected to drive
demand for Digital Skills
• Hiring by banking sector expected to remain robust driven by network expansion by private banks, set up of new banks
and replacement of retiring staff by PSU banks.
• Government continues to focus on skills development to drive sustainable and inclusive growth. Union cabinet has
approved an outlay of Rs 12,000 Cr over the next 4 years under PMKVY
• MHRD has released the draft of new education policy 2016 based on the recommendations of TSR Subramanian
committee report. Shift in focus from quantity to quality and transparency
The Next Frontier 16 www.niit.comNIIT: Growth Platforms
Corporate Skills & Careers Schools
MTS Beyond IT & Digital nGuru
Transformation
31 global MTS Signed 139 Schools
customers vs 25 in Q1 Beyond IT contributes 45% in Q1FY17;
FY16 vs 39% LY addressed 3,102
Revenue visibility at digiNxt series launched schools
$ 208 mn
Capacity utilization of Own Focussed IP led
centers in India @ 35% in private school
Q1 FY17 vs 34% end FY16 business contributed
33% for Q1 FY17 up
6% YoY
Liquidity, Profitability and Capital Efficiency
The Next Frontier 17 www.niit.comQ1 FY17: In Perspective
Corporate Learning Group (CLG): Continued Strong performance
• Revenue at INR 1,523 Mn up 19% YoY; Constant currency growth @ 13% YoY;
EBITDA margin at 12% (rock steady consistency)
• 31 MTS customers now contribute 91% to CLG revenue
• Revenue Visibility at $ 208 Mn
Skills & Careers Group (SNC): Renewal phase
• Revenue at INR 773 Mn (up 7% YoY vs -3% in Q1 FY16)
• Revenue from Focus-Business up 11% YoY
• Q1 FY17 EBITDA INR 34 Mn (4% vs 0% in Q1FY16), aided by stronger product mix
• Beyond-IT contributes 45% to SNC revenue compared to 39% in Q1 FY16
School Learning Group (SLG): Move towards IP led asset light business model
• Revenue at INR 307 Mn down 5% YoY. Achieved 7% EBITDA vs 6% in Q1 FY16 despite planned ramp down of
government school projects
• Order Intake of INR 106 Mn; added 139 schools during the quarter
• Focussed IP led private school business contributes 33%; up 6% YoY
NIIT: Growth & Profitability continues its march upwards – Firmly & Steadily
• Revenue at INR 2,604 Mn; up 12% YoY; Revenue from Focus-Business up 15% YoY
• EBITDA at INR 222 Mn at 9% of revenue; up 151 bps YoY
• PAT at INR 74 Mn vs INR 150 Mn in Q1 FY16 due to impact of forex loss and exceptional items contributing to
lower associate profit
• Operating ROCE at 8%
The Next Frontier 18 www.niit.comKey Financials
INR Mn Q1 FY17 Q1 FY16 YoY Q4 FY16 QoQ
Net Revenue 2,604 2,332 12% 2,389 9%
Operating expenses 2,382 2,168 10% 2,256 6%
EBITDA 222 164 36% 132 68%
EBITDA% 9% 7% 151 bps 6% 298 bps
Depreciation 118 130 -9% 116 2%
Net Other Income -93 -14 Rs -79 mn -14 Rs -79 mn
Profit before Tax 11 20 Rs -10 mn 3 Rs 8 mn
Tax 8 6 Rs 2 mn 14 Rs -6 mn
Operational Net Profit 3 14 Rs -12 mn -11 Rs 14 mn
Share of Profits from Associates 71 136 Rs -64 mn 189 Rs -118 mn
PAT 74 150 Rs -76 mn 178 Rs -104 mn
Basic EPS (Rs.) 0.4 0.9 -0.5 1.1 -0.6
Sequential (QoQ) numbers may not be comparable due to business seasonality
• Strong growth in Corporate Learning and back to growth of Skills & Careers Group helps offset planned ramp
down of government schools business
• EBITDA improved by 151 bps YoY for FY16 on account of Business transformation and business mix
• Depreciation down 9% YoY, reflecting planned reduction in capital intensity
• OPAT & PAT impacted by adverse forex fluctuation (impact INR 33 mn for Q1FY17 against a gain of INR 19 mn in
Q1FY16, overall movement of INR 52 mn) and exceptional items contributing to lower associate profit
The Next Frontier 19 www.niit.comBusiness Mix
Q1 FY17 Q1 FY16
Schools Schools
12% Net Revenue
14%
Skills &
Careers Corporate Growth Skills & Corporate
30% 58% Corporate 19% Careers 55%
31%
Skills & Careers 7%
Schools -5%
NIIT 12%
Q1 FY17 Q1 FY16
EBITDA
Schools, Online, Schools,
(9) Growth 18
20
Corporate +28 Mn Skills & Careers,
Skills & Careers, Corporate, (3)
34 177 Skills & Careers +37 Mn
Schools +3 Mn Corporate,
Online -9 Mn 149
NIIT +58 Mn
The Next Frontier 20 www.niit.comCorporate Learning Group
INR Mn Q1 FY17 Q1 FY16 YoY Q4 FY16 QoQ
Net Revenues 1,523 1,285 19% 1,360 12%
EBITDA 177 149 18% 158 12%
EBITDA % 12% 12% 0 bps 12% -1 bps
• Revenue at INR 1,523 Mn up 19% YoY; Constant Number of MTS Customers
currency Revenue growth at 13% YoY 31
• Strong momentum on back of 31 MTS customers 21
24
which now contribute 91% to CLG revenue 14
• Two new contract wins and one major contract 6
9
extension from our existing MTS customers were
done during the quarter FY11 FY12 FY13 FY14 FY15 FY16
• EBITDA consistent at 12%
• Revenue Visibility at $ 208 Mn up 3% YoY
The Next Frontier 21 www.niit.comSkills & Careers Group
INR Mn Q1 FY17 Q1 FY16 YoY Q4 FY16 QoQ
Net Revenues 773 725 7% 728 6%
EBITDA 34 -3 37 mn -19 53 mn
EBITDA % 4% 0% 487 bps -3% 696 bps
• Revenue at INR 773 Mn up 7% YoY
• Revenue from Focus-Business up 11% YoY
• Beyond-IT contributes 45% to SNC revenue vs
39% in Q1 FY16
• Successful turnaround on Revenue, EBITDA &
Cash
• Launched digiNxt Series
The Next Frontier 22 www.niit.comSchool Learning Group
INR Mn Q1 FY17 Q1 FY16 YoY Q4 FY16 QoQ
Net Revenues 307 322 -5% 301 2%
EBITDA 20 18 15% 16 31%
EBITDA % 7% 6% 111 bps 5% 147 bps
• Revenue at INR 307 Mn down 5% YoY;
• Overall revenue impacted due to planned
ramp down of government school projects
• EBITDA consistent at 7%
• Revenue from Focussed IP led private
school business contributes 33% to SLG
revenue; up 6% YoY
• Added 139 schools, Order intake of INR
106 Mn
The Next Frontier 23 www.niit.comPeople
2,732
2,695 2,705
2,466
2,372
Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17
Headcount up 94 QoQ and down 229 YoY
* excludes project retainers
The Next Frontier 24 www.niit.comFuture Direction The Next Frontier www.niit.com
The Next Frontier: Strategic Agenda
Technology
Enabled
Shared
Service
Platform
The Next Frontier 26 www.niit.comCorporate Learning Group Future Direction The Next Frontier www.niit.com
CLG: Corporate Training Spending
15%
12% Corporate Training Spend
10%
Spending Growth
10% Spending on Training
6%
in USA: $90+ Billion
Global Training Spend: Continues to Grow
2%
$135Bn+
-11% -11%
Increasing trend
2007 2008 2009 2010 2011 2012 2013 2014
towards outsourcing
Annual Spend/Employee ($)
Professional Scientific
1,748 and Technical Services Top 3 Content Areas
535 Manufacturing Mandatory And Managerial and Profession/ Focus on
Compliance Supervisory Industry specific
Technology/Telecom
1,392 Pharma/ Healthcare 1 2 3 Energy, Lifesciences
and BFSI Industries
Finance, Insurance,
1,107 Real Estate
Corporate Training market represents a huge opportunity
The Next Frontier 28 Source: Bersin By Deloitte, ATD www.niit.comCLG: Learning Trends We Are Tracking
Technology Pedagogy Business
Flipped Classrooms Running Training Like a
Games
Curated Content (NIIT.TV) Business
Ubiquitous Learning
Today
Mastery Learning Instructor Quality
Video
Accelerated curricula Reinvention
Competency Based Design Learning Economics
Virtual Reality
Coming Soon…
Augmented Reality &
Neuroscience “Learning Insurance”
Learner Aware Systems
Influx of startups
The Next Frontier 29 www.niit.comCLG: E.A.S.E. Platform
“I need a one-stop shop
to get all my data so that I
can make business
decisions. My LMS won’t
give me this.”
Customer Demand
NIIT Solution
The Next Frontier 30 www.niit.comCLG: Managed Training Services
Delivering Efficiency and Effectiveness In Training
The Next Frontier 31 www.niit.comCLG: Managed Training Services
MTS Revenue (Rs Mn) Number of MTS Customers MTS contribution to CLG
5111 31
87% 90%
4253 24 79%
3148 21 72%
6x in 5 years 63%
2,174 14
1,544 9 43%
852 6
FY11 FY12 FY13 FY14 FY15 FY16 FY11 FY12 FY13 FY14 FY15 FY16 FY11 FY12 FY13 FY14 FY15 FY16
Increasing Differentiated Revenue Visibility at
contribution from competitive $200 Mn from existing
MTS positioning contracts
MTS continues drive steady growth for CLG business
The Next Frontier 32 www.niit.comCLG: Taking MTS to Next Level Of Growth
4 Comprehensive Engagements
3 Bid Process
Domain expertise
Management Global delivery capability
High Capability and
2 Productivity Pre-filter RFPs Service Maturity
Big ticket annuity
Contracting Maturity
Procurement contracts
1 Improve Win Rates
Efficiency Step up people Improve Book to Bill ratio
productivity and Higher Sales Productivity
optimization of effort &
Centralized program for resources through
ensuring efficiency in automation and tools
procurement of faculty, Improve margins for NIIT
facilities etc.
Increase value to
customer
Driving Scale and Profitability For CLG
The Next Frontier 33 www.niit.comSkills and Careers Group Future Direction The Next Frontier www.niit.com
2022 Projections: Huge Capacity Creation Required
Total supply by 2022
@ current capacity 61.5
(2013-14)
Addition to workforce 115
@ 12.8 million per year
Reskilling / upskilling 11X
8x
of 90% of existing 611
workforce (679 million) Source: McKinsey analysis;
Census 2011; ILO World
Development Indicators
Reduction due to 48
ageing/ retirement * 2012, NSDA data
Total demand by 2022 678
*Assuming that the existing workforce in the age group of 51-59 will not be re-skilled
Eleven-fold increase in capacity is required to meet aspirations
The Next Frontier 35 www.niit.comThe Next Frontier
-10
10
20
30
40
0
Building,
31
Construction & Real
17
Retail
Beauty and
10
Wellness
Transportation &
12
Logistics
Furniture &
7
Furnishing
Handlooms &
6
Handicrafts
Sectors
Tourism, Hospitality
6
& Travel
6
Textile & Clothing
Skill Gaps: Sectorial Employment & Growth Opportunities
5
Domestic Help
Source: Sector wise Human Resource and Skill Requirements Reports, 2013 – 2022; NSDC
5
Security
4
Food Processing
4
Healthcare
36
Electronic & IT
4
Hardware
Education/ skill
4
development
Leather and
4
Leather Goods
4
Gems & Jewellry
Portfolio Expansion (Service Skills)
Auto & Auto
4
Top 10 sectors account for
Components
about 80% of requirements
Chemical &
3
Pharmaceuticals
Incremental Human Resource Requirements by Sector between 2013-22 (In Million)
2
Telecommunication
Construction
3
Material & Building
2
IT & ITES
2
BFSI
Media &
1
Entertainment
Market Leader
Agriculture
www.niit.comSNC: Business Transformation
Skills
Technology
Service Integrated Marketplace
New India
B2B/B2C
Intensive /
with 360◦
One SNC Sector Multi
Structure China Skills business Partner
Modal
Ecosystem
IT,
IT, IFBI, India
Imperia, China
Non-IT Standalone Centre Everything Old
Centre B2B, B2C Driven In house Structure
Uniqua, NYJ ROW
Driven
The Next Frontier 37 www.niit.comDigital Transformation –IT Sector
Global Technology and Business Services Spend
Traditional Tech
Global Technology and Business
Digital Tech 3% to 4% 4100 Services to Touch USD 4 Trillion by
+1400 3550 2025
+30%
80% 35% 60%
2757 -450 to -650
10% -15% -25% 100%
20%
Share of Digital Technologies to
15%-25% of 80% of new increase to 60%
90% traditional spend around 65%
spend saved by Digital 40%
going digital Technologies
2014 Traditional New Services 2020E 2025 E
50% - 60% of today’s workforce
Spend Lines needs to be reskilled to be relevant
Evaporates by 2020
Source: IDC, NASSCOM
The Next Frontier 38 www.niit.comSNC: Digital Opportunity Landscape
Digital Creators ~400K
Market
Opportunity Digital Developers
~4 M
Digital Shapers
~ 40 M
Digital Workers
~400 M
The Next Frontier 39 www.niit.comSNC: Digital Transformation The Next Frontier 40 www.niit.com
Online Learning Future Direction The Next Frontier www.niit.com
SNC: Online Learning Market
Growth in Online Learning: 2015 India
India 55%
India part of a Flat World Fastest growing market
China 52% – Global business model for Online Learning
Malaysia 41%
Romania 38%
Next battleground for
Online Learning
Poland 28%
Source: eLearningindustry.com
The Next Frontier 42 www.niit.comSNC: Delivery Transformation
5500+ Courses Avg. Session
Duration: 13 Min
Age Gender
161 Cities,
18-24: 65%, Male: 61%,
1965 Cities Female: 39%
24-34: 23%
Registered Users (‘000)
250+
90
Dec 31 June 30
The Next Frontier 43 www.niit.comSNC: 360 Degree Partner Ecosystem
Industry Demand Learner Needs
• Certified Skills • Learn
• Source to Hire • Get Certified
• Skills Upgrade • Get/Change Job
• Get Promoted
B2B Engagement Multi Modal
Platform
Ecosystem Needs NIIT Managed Services
• Brand Association
• Reach
Building a Comprehensive Skills & Careers Ecosystem
The Next Frontier 44 www.niit.comSNC: Multi-Modal Platform
Channels
Own Brick, Partner Brick, Inside
Campus, Online Channel
Platform Modes
From Primarily a
Single Mode Brick- 1. On Demand E-Learning (Pure
Online)
and-Portal Business
2. On Demand MOOCs & Recorded
to 4 Channels
3.
Lectures
Live Synchronous – Direct to
Device
Multi-Modal
Platform Based 4. Synchronous CR Mode (Cloud
Classroom)
Business 5. Local ILT
Modes 6. Flipped Classroom (Blended)
7. Immersive Project Based Learning
(StackRoute)
The Next Frontier 45 www.niit.comSNC: Online Learning Market
UG Students Fresh Grads Working Pros
(20 m) (6m/Year) (40m – FY06-15)
Segment Specific Demand & Lead Generation – Digital Led, On Ground Support
NIIT.tv – Shared Engagement Platform with “Free Courses & Services”
CRM TRAINING.COM
Product/Program Specific Counselling & Sales
Adv
Courses Courses
Upsell
Prof Prof
Cert PGP Cert Dip
The Next Frontier 46 www.niit.comSchool Learning Group Future Direction The Next Frontier www.niit.com
SLG: Focus Areas
Defocussed from Exited capex driven
government schools business models in
Be a School business private schools
Service Private Schools
(B2B)
Service Govt. No Nationally Dominant
Schools (B2B) Player in private schools
Large untapped
space with
opportunity in B2C space
comprehensive product
Service Private portfolio
Schools (B2B) Service Students (B2C)
Service Students Needs separate focus
(B2C) and attention
Restructured to unlock value
The Next Frontier 48 www.niit.comSLG: Next Frontier For B2B Business
CBSE
ICSE
~120K Private Schools
12%
2% IB
0.1%
Assets • High capital intensity
State
Boards • High people
86%
In School Service People dependence
• Diminished value of IP
• Linear, non-scalable
IP
B2B Business
Cloud IP • IP driven
Remote Service • Asset light
• Technology intensive
People
Services • Non linear, highly
scalable
Move to asset light, technology intensive, IP driven business model
The Next Frontier 49 www.niit.comSLG: K-12 Landscape
NIIT’s existing business
targets a portion of the
School Fee fee that parents pay to
schools.
Spend on L&D
Out of Spending outside schools
School Spend represents a large portion
of total spending related
to education and
development for kids
Subject Tuitions Test Prep Soft Skills Extra Curricular A B2C player has direct
access to this spending
*Representative
Large Untapped Opportunity in B2C Segment
The Next Frontier 50 www.niit.comSLG: B2C Opportunity
Practice tests
Testing platform
Question bank Skill gaps identification
Answer rubrics Learning path
Scoring
Data Analytics
Integrated Platform
E-books
Digital Content
Workbooks
Problem Gaps
Labs
• Academic Results • Skill Identification
• Usage Flexibility Solution
• Fixated on Content • An integrated platform with
• No Integration diagnostics that allows the learner
to individualize their learning path
The Next Frontier 51 www.niit.comSLG: Democratize Quality Education
Data Driven Platform
Leverage Existing Assets • Learning Analytics
• Students in Private (1.5Mn) and
• Adaptive Learning
Government schools (2Mn)
students serviced by SLG
• NIIT Students/Alumni
EDUTAINMENT
• Schools IP
• NIIT Brand USEFUL INFORMATION
• Offline Reach
SELF-PRACTICE
SELF-ASSESSMENT
Monetization Models COLLABORATION
• Freemium SELF-LEARNING
• Subscription
• Pay as you go TUTOR ACCESS
• Product specific fees
E-MARKETPLACE
Opportunity to leverage existing assets to gain scale
The Next Frontier 52 www.niit.comOverall Future Direction The Next Frontier www.niit.com
Technology
Enabled
Shared
Service
Platform
The Next Frontier 54 www.niit.comYou can’t spell
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