Systems Limited (PSX: SYS), established in 1977 as a private limited company, transitioned to a publicly listed entity in 2005 and was subsequently listed on the Pakistan Stock Exchange (PSX) in 2015. The company specializes in software development, trading, and business process outsourcing services, playing a pivotal role in driving its clients’ digital transformation journeys. With a robust presence in the local market, SYS has also firmly established itself across key international regions, including the US, UK, EU, and the Middle East.
Financial Performance
SYS has demonstrated consistent growth in revenue and profit, with 2022 standing out as the strongest year. While margins have fluctuated over the years, the company has maintained resilience through strategic client selection, innovative offerings, and geographical expansion. In 2019, SYS’s topline grew by 42.21 percent year-on-year, fueled by a strong client portfolio comprising large companies that ensured recurring business. Despite rising costs from salaries, software purchases, and technical consultancy, gross profit increased by 50.73 percent, with gross profit (GP) margin improving to 33.2 percent from 31.3 percent in 2018. Operating profit surged by 71.2 percent, lifting the operating profit (OP) margin to 20.4 percent. Net profit grew by 35.13 percent to Rs.1,364.13 million, while net profit (NP) margin slightly dipped to 25.5 percent. EPS increased from Rs.8.16 in 2018 to Rs.10.95
Amid COVID-19 disruptions, SYS leveraged demand for digital solutions, achieving a 40.48 percent increase in revenue in 2020. Export sales, primarily to North America and Europe, coupled with currency depreciation, bolstered topline growth. Gross profit rose by 57.51 percent, with GP margin reaching a peak of 37.2 percent. OP’s margin climbed to 27.2 percent with operating profit growth of 87.72 percent. Net profit grew by 60.83 percent to Rs.2,193.92 million, with NP margin at 29.2 percent. EPS improved to Rs.17.31.
In 2021, the company’s revenue growth accelerated to 58.42 percent year-on-year, driven by robust demand across all geographies and business segments. However, rising costs reduced the GP margin to 33.5 percent. Operating profit increased by 37.75 percent, though OP margin dropped to 23.7 percent due to elevated expenses. Net profit grew by 51.36 percent to Rs.3,320.69 million, with an NP margin of 27.9 percent. EPS decreased to Rs.11.98 due to an increase in outstanding shares.
SYS experienced exceptional topline growth of 73.43 percent in 2022, driven by IT services and increased demand globally. Gross profit rose by 69.25 percent, but GP margin declined to 32.7 percent due to inflation and operational expansion. Operating profit increased by 73 percent, while NP margin reached 30.5 percent, with net profit surging by 89.71 percent to Rs.6,299.84 million. EPS climbed to Rs.22.29.
SYS continued its upward trajectory with a 55.19 percent rise in revenue in 2023, supported by strong export contributions (83 percent of total revenue) and demand across verticals. Despite record inflation impacting costs, gross profit grew by 42.36 percent, though the GP margin dropped to 30 percent. Operating profit rose by 45.66 percent, while OP margin fell to 22.2 percent. Net profit increased by 35.86 percent to Rs.8,559.16 million, with NP margin at 26.7 percent. EPS improved to Rs.29.22.
Systems Limited in 2024 and beyond
During the first nine months of 2024, Systems Limited (SYS) delivered notable financial performance, showcasing resilience amidst challenging macroeconomic conditions. The company’s revenue increased by 21 percent year-on-year and achieved record-breaking topline revenue, gross profit, and operating profit during the first nine months of 2024. Dollar-based growth stood at 28 percent, outperforming PKR growth, largely due to 93 percent of revenue being foreign exchange-driven.
The Middle East led revenue contributions (58 percent), with strong performance also in North America (22 percent) and emerging growth in Europe and the Asia-Pacific regions. Saudi Arabia, UAE, and Qatar were highlighted as key markets for future growth. It also emphasized targeting larger enterprise accounts and scaling smaller clients to higher revenue tiers. The company has diversified its portfolio, with significant contributions from its top 20 clients (48 percent of revenue). Investments in AI and cloud-based solutions have become revenue drivers, with multiple AI use cases deployed across industries like BFSI, retail, and telecommunications.
Despite this robust topline growth, SYS faced a decline in net profit, which fell by 38 percent to PKR 4.2 billion in 9M 2024 from PKR 6.73 billion in 9M 2023. The drop in net profit was primarily attributed to exchange losses stemming from rupee appreciation, which impacted the company’s profitability. Additionally, gross profit decreased slightly by 1 percent year-on-year, reflecting the challenges posed by rising costs, including inflation and wage adjustments.
Earnings per share (EPS) for the period also reflected these pressures, declining from PKR 23.14 in 9M 2023 to PKR 14.33 in 2024. The company’s operating profit saw a 10 percent year-on-year reduction due to higher inflationary costs and the effects of a lower average exchange rate. However, SYS remains optimistic, as recent cost optimization measures and efficiency improvements have begun to show results, with margins expected to stabilize and improve in the near future.
SYS received the Forbes Asia “Best Under a Billion” award for the fifth consecutive year and retained its Microsoft Inner Circle status for the fourth year during the period, showcasing its global credibility and operational excellence.
SYS continues to benefit from its focus on export-driven revenue, which accounts for a significant portion of its business. The company’s strong client portfolio, particularly in international markets, has been a key factor in driving topline growth. SYS’s strategy of targeting larger, recurring enterprise clients while optimizing its operations positions it well for sustained performance. As the company moves forward, its emphasis on cost control, operational efficiency, and technological innovation is expected to further enhance its financial stability and market competitiveness.It aims to achieve $1 billion in revenue by scaling existing operations, focusing on high-value contracts, and strategically entering new markets. It plans to expand its AI and digital service offerings and leverage partnerships to fuel growth.
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