Yet another strong quarter has helped Pakistan’s leading IT exporter to get on a solid footing to close out the calendar year on a high. In its latest financial results posted to the bourse, Systems Limited (PSX: SYS) has already crossed CY20 revenue and profit figures in the first nine months of CY21, showing solid yearly growth up and down the income statement. While some help came from exchange-related gains on account of PKR volatility, the core operating performance has been the decisive factor in the lift-off.
During 9MCY21, SYS consolidated topline expanded by 49 percent year-on-year to reach all-time high of Rs10.5 billion. Breaking this figure into constituent parts, the Systems Limited holding company delivered a 52 percent yearly growth to help topline reach Rs8.1 billion, accounting for 77 percent of consolidated net sales. This firm, which derives four-fifth of its sales via exports, specializes in IT services including software development and BPO for North American, Middle Eastern, Pakistani and European markets.
As per detailed company information, the holding company scored double-digit topline gains in all four regions, with revenues coming in exceptionally strong for the North American and Middle Eastern regions. The North American market remains by far the the dominant revenue origin and profit center for the firm’s digital, data and cloud services, accounting for over half of standalone topline and net profits in the nine-month period under review.
Meanwhile, the two subsidiaries – the Pakistan-based E-Processing Systems and the Dubai-based TechVista – together grew their sales by 40 percent year-on-year in 9MCY21 to Rs2.4 billion. The growth among subsidiaries is presumably driven by the digital airtime recharge platform, OneLoad, which is owned by E-Processing Systems. As per latest company information, OneLoad has been able to expand its network to 50,000 retailers as of September 2021, helping gross merchandise value to grow strongly.
While a major portion of yearly gains in consolidated gross profit, operating profit and net profit were provided by strong annual growth under those heads by the holding company, the subsidiaries stand out in terms of making remarkable improvement on those counts. Taken together, the subsidiaries’ gross profit grew by 86 percent year-on-year to Rs761 million, their operating profit increased by 251 percent year-on-year to Rs283 million, and their net profit surged 316 percent year-on-year to Rs212 million.
In order to expand further and service more export deals, SYS is on an aggressive recruitment drive, for IT is a knowledge-intensive business. Economic activities and consumer spending picking up this year in major overseas geographic regions has helped buttress SYS exports. It’s a tailwind which the firm can count on. Let’s see what the last quarter of the calendar year has to offer.