Despite downbeat economic sentiment at home and fears of recession in key export markets abroad, the stars continue to shine bright above Pakistan’s leading software exporter. As per the latest company financials posted to the bourse for the third quarter ended September 30, 2022, Systems Limited (PSX: SYS) more than doubled its consolidated topline and bottomline compared to the same period last year, thanks to strong contribution from both the holding company and a growing set of subsidiaries.

Within the roughly Rs9 billion of group net revenues during 3QCY22, the holding company (Systems Limited) provided Rs6 billion, or equivalent to 69 percent of the consolidated topline. These standalone revenues – which are generated mainly from exports of IT services including software development, software trading, and business process outsourcing, in markets of North America, the Middle East, and Europe – grew at a remarkable pace of 91 percent year-on-year on a large base.

Meanwhile, the subsidiaries together raised their 3QCY22 topline more than three times relative to the same period last year to Rs2.67 billion. This growth also reflects the fact that revenues from the newly-acquired firms – NDCTech and Treehouse – were brought under the financial fold from July 1, 2022. SYS acquisitions in recent times have helped it to diversify its revenue base and increase its scale.

Despite proportionally-higher expenditures (relative to topline growth) on core costs (‘cost of sales’) and administrative expenses in the quarter under review, SYS was able to achieve strong profitability expansion down the line. The holding company’s operating profit doubled to Rs1.42 billion, whereas the cumulative operating profits of subsidiaries more than tripled to Rs240 million.

Further boost for the consolidated financials came from ‘other income,’ which rose more than 2.5 times over the same period last year to reach Rs754 million in the quarter under review. Bulk of this gain originated from the holding company’s exports, as significant windfall continued to be generated from the PKR depreciation.In the end, the holding company generated Rs2 billion in net profits (111% YoY growth) and the subsidiaries accounted for Rs126 million in net profits (170% YoY growth).

Going forward, the subsidiaries together need to improve their profit contribution to the group: while they provided a much-improved 31 percent to the consolidated topline in 3QCY22, their contribution to the consolidated net profit was just 6 percent in the quarter (slightly up from 5% in 3QCY21). Meanwhile, the SYS consolidated topline and bottomline during 9MCY22 have well exceeded the full-year CY21 levels. Let’s see what the final quarter has in store for the fast-growing Lahore-based software giant.