SYS prepares for an AI-led future with global expansion

October 07, 2026 (MLN): Systems Limited (PSX:SYS) is charting a growth path built on diversifying its revenue base across North America, the UK and Europe, APAC and the Middle East, while scaling its recent acquisitions and leaning on rising AI-led enterprise demand.

The company said it achieved strong strategic growth in the second quarter, underpinned by a healthy backlog, targeted acquisitions and expansion into new service lines.

Both of its acquisitions, Confiz and the BAT Shared Services center, performed well on revenue growth, and management is now working to unlock cross-sell and upsell opportunities within these accounts.

It added that it continues to explore mergers and acquisitions, mainly in the West, to build a balanced portfolio and reduce geopolitical exposure, according to its half-yearly report for the period ended June 30, 2026.

In North America, the company is scaling its recently acquired platforms and widening enterprise client relationships.

The Confiz deal has given it direct access to North American enterprise clients, and management is confident the geography will diversify its revenue profile.

Integration is progressing as planned, with synergies expected to come through in the second half of the year.

The company said the UK entity was incorporated in the first quarter and is being built into a full-fledged regional operation, with leadership onboarded and full operations expected later this year.

The UK will serve as the hub for wider European expansion, including continental Europe.

Investments made in APAC in the previous year are yielding results, with strong momentum in Vietnam, Malaysia and Indonesia, supported by a growing backlog and stronger channel partnerships.

Plans are under way to build sales capability further and evaluate a delivery center in Malaysia.

In the Middle East, management said regional geopolitics has not affected growth so far. The customer base is intact, and the company does not operate in the hit sectors such as tourism and real estate.

Banking, telecom and the public sector continue to spend in line with the UAE leadership's vision of moving half of government operations and sectors to autonomous, self-executing AI systems within two years, which the company said is creating significant demand from its public sector customers.

The domestic business, meanwhile, has turned around, with profitability moving from negative to positive.

Management credited its enterprise-focused strategy and operational discipline, and expects further improvement, supported by a healthy backlog and pipeline, with a focus on bringing domestic margins closer to those earned abroad.

On AI, the company said the technology is amplifying demand for services, with productivity gains translating into larger deal sizes and AI creating new enterprise work.

It has embedded AI across internal processes and client-facing solutions, and widely adopted AI tools to raise workforce productivity.

Its global base of more than 300 customers is a major opportunity, as each is looking to become more agentic and make AI a growth engine.

On the supply side, the Egypt center is now operational with added capacity, which management said gives the company resilience and a strategic edge for regional and other customers.

It has also started a development center in Malaysia and is planning one in Jordan to widen its access to global talent.

Management flagged currency pressure as a key headwind.

With around 80% of its cost base tied to human resources and more than 90% of revenue in foreign currency, it said wage and employee cost inflation lifted total cost by more than 12%, while the rupee appreciated about 2% since June 2025.

The Real Effective Exchange Rate (REER) at 108 points to high inflation and an overvalued rupee, in the company's view.

Despite a 14-15% negative impact on costs, the company still posted absolute growth in profitability on the back of strong revenue growth.

On the financial front, consolidated revenue for the six months ended June 30, 2026 grew 35.3% year-on-year to Rs49.72bn from Rs36.74bn.

Gross profit rose 36.6% and operating profit rose 28.6%, which kept gross and operating margins in line with the same period last year.

Net profit increased a slower 17.4% to Rs6.05bn from Rs5.15bn, as an exchange loss in the period replaced the exchange gain recorded a year earlier.

The company said it absorbed annual wage adjustments and fuel price inflation without any currency benefit, with the rupee strengthening to Rs278 per dollar in June 2026 from Rs283 in June 2025.

It said this was achieved through organic and inorganic growth, better efficiency and overall optimization.

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