Islamabad: Systems Limited (SYS) reported an 18% year-on-year revenue jump to PkR36.7bn in the first half of the current year (1HCY25), up from PkR31.0bn in the same period last year (SPLY), according to key takeaways from the company's analyst briefing. The firm highlighted a significant portion, 93%, of its revenue is generated in foreign currency, while only 42% of its expenses are in foreign currency.
SYS also reported a rise in high-value clients. Clients generating over US$100k in revenue increased to 181 from 167 in the same period last year. Furthermore, those in the US$5-10mn bracket grew significantly, rising to nine from three.
Second-quarter gross margins saw improvement, reaching 25.3% compared to 22.8% last year. The company attributes this gain to improved margins in the domestic market following the expiry and renegotiation of unprofitable contracts. Management indicated that the few remaining loss-making domestic contracts are nearing completion, anticipating further domestic profitability enhancements.
SYS highlighted the positive impact of investments in technologies like AI, converting previously unbillable effort into revenue-generating operations. The firm asserted that the rise of AI, especially Generative AI, does not endanger its business due to the complexity of its clients’ operations, primarily large enterprises where AI cannot fully replace human input.
The company is shifting its client acquisition strategy towards larger enterprises, moving away from its earlier concentration on small to medium-sized businesses. SYS believes that AI will enhance, not replace, human capabilities and is actively training its workforce in AI tools to improve service delivery.
The recent acquisition of British American Tobacco SAA Services marks a strategic move for SYS, opening a new business segment. This expansion focuses on high-end marketing, branding, consumer insights, premium business process outsourcing, and commercial finance services.
Despite reduced government spending in the Middle East and North Africa (MENA) region, SYS maintains a positive outlook, viewing this as a cyclical pattern. The corporation believes this market remains largely unexplored and continues its geographical diversification strategy. AKD Securities maintains a ‘BUY’ rating for SYS based on the increase in IT exports, bettering gross margins, and the company's strong presence in the expanding MEA IT market. Their December 2025 target price is PkR176 per share.