Systems (SYS) Q3 2024 earnings summary

Executive summary

• Q3 revenue reached PKR 17,286M, up 22% YoY; profit after tax rose 18% to PKR 2,189M. 9M revenue reached $173.4M, up 30% YoY.

• Consolidated 9M revenue rose 29% to Rs 48.31bn; reported net profit fell 24% to Rs 5.43bn, while currency-normalized profit after tax grew 20%.

• Q3 set records for revenue, gross profit and operating profit; growth was supported by enterprise accounts, customer expansion, partnerships and delivery efficiency.

Financial highlights

• Q3 USD revenue was $62.1M, up 9% QoQ and 28% YoY; gross profit was PKR 4,379M and operating profit PKR 2,360M.

• Q3 EBITDA was PKR 2,728M, up 17% QoQ and 4% YoY; profit before tax was PKR 2,430M, up 29% and 23%, respectively.

• Consolidated 9M gross profit was Rs 11.51bn and operating profit Rs 6.22bn; EPS was Rs 18.54 basic and Rs 18.44 diluted.

• 9M revenue was 93% foreign-currency based; PKR appreciation and exchange losses weighed on reported results.

Outlook and guidance

• Sustainable margin target is 25%-30%; management expects 27%-30% if currency depreciates 5% YoY, versus ~25% if it continues to appreciate.

• Strong pipeline and backlog support continued growth; priorities include enterprise account expansion, current-market growth and investment in talent, AI offerings and geographic diversification.

• Management expects unprofitable Pakistan contracts nearing completion to improve domestic profitability; margin improvement is expected to become visible over the next couple of quarters.

• Acquisitions aligned with strategy remain a priority, but inorganic growth was deferred while margins and operations were addressed; no timetable was given.