Systems Limited posts 17.8% growth in profit for 3rd quarter of 2024

Systems Limited reported a 17.8% growth in net profit as company is aggressively expanding into high-growth markets.

According to a stock filing, Systems posted net profit of PKR 2.19 billion ($7.8 million) for the quarter ending September 30, 2024, up 17.8% from PKR 1.85 billion last year.

With 90% of its business in USD to mitigate currency risk, the stable exchange rate is expected to continue. However, rising inflation is pressuring margins despite strong growth.

To counter this, the company is optimizing costs, improving efficiencies, and negotiating contract rates. These efforts are already showing results this quarter and are expected to continue.

With a solid pipeline and strong backlog, the company is well-positioned for future growth. Strategic partnerships with major players like Microsoft are generating new leads and opportunities.

The company is also collaborating with other partners and transitioning towards offering AI as a Service to meet the growing demand for AI-driven solutions. It is developing industry-specific accelerators for BFSI and Pharma as references.

Geographic diversification is strengthening the company's resilience and growth prospects. The European market is stable, the previously flat US market is now contributing positively, and similar momentum is expected in 2025.

The Middle East remains a key growth driver, focusing on expanding enterprise customers and market penetration. The company is reducing its focus on the domestic market, with unprofitable contracts in Pakistan nearing completion, which should improve profitability by year-end. Increased exports have further bolstered overall performance.

Earnings per share (EPS) came at PKR 7.49 up from PKR 6.36 last year. The company did not announce any dividends.

Revenue for the quarter rose 9.8% to PKR 4.38 billion from PKR 3.99 billion in the same quarter last year.

For the nine months ending September 30, 2024, revenue increased by 29% to PKR 48.31 billion. Gross profit and operating profit grew by 10% and 14%, respectively. However, net profit fell by 25% to PKR 5.43 billion due to exchange losses and higher taxes.