Systems Limited earnings soar 48% in CY25

April 7, 2026 (MLN):  Systems Limited (PSX: SYS) reported an exceptional financial performance for the year ended December 31, 2025, with its consolidated net profit surging 48% to Rs11.04bn, up from Rs7.46bn in the previous year.

Earnings per share (EPS) rose proportionately to Rs7.52, up from a restated Rs5.11 in 2024, while the company declared a cash dividend of Rs2 per share, reflecting strong profitability and sustained cash generation.

This stellar bottom-line growth was underpinned by robust double-digit expansion in top-line revenues, improved operational efficiency, enhanced productivity, and effective optimization of costs, particularly fixed costs.

Since FY2021, the company has delivered an impressive compounded annual growth rate (CAGR) of 51% in revenue, driven by both the parent company and its subsidiaries. The company’s net revenue from contracts with customers grew 19% year-on-year to Rs80.39bn, compared to Rs67.47bn in the previous year.

Crucially, cost discipline remained a key strength, with cost of revenue increasing by only 13% to Rs57.98bn. As a result, gross profit surged 39% to Rs22.41bn from Rs16.16bn, reflecting meaningful margin expansion as revenue growth outpaced the rise in direct costs.

On the operating side, expenses rose in line with business growth, with administrative expenses increasing 29% to Rs6.23bn and selling and distribution expenses climbing 25% to Rs3.10bn.

The company also recorded a 100% surge in impairment losses on financial assets to Rs971.49m, while other operating expenses rose to Rs23.91m. Notably, research and development expenses were trimmed by 11% to Rs82.32m, indicating disciplined allocation of resources.

Despite the higher overhead burden, strong gross profit growth translated into a 45% increase in operating profit to Rs12.01bn.

Below the operating line, the company benefited from additional tailwinds, with other income rising 41% to Rs852.22m. Finance costs were reduced by 28% to Rs337.45m, while the share of loss from associates narrowed by 39% to Rs72.86m.

Consequently, profit before taxation and levy climbed 50% to Rs12.45bn. Even after absorbing a 73% increase in levy to Rs821.34m and a 65% rise in taxation expense to Rs586.33m, the company achieved a consolidated net profit of Rs11.04bn.

The Banking, Financial Services, and Insurance (BFSI) segment emerged as the largest contributor to revenue, supported by aggressive cross-selling and upselling initiatives following the acquisition of a Temenos regional partner.

While margins in this segment improved, they remained relatively lower compared to others due to continued investments in sales and marketing and amortization related to the country model bank (CMB) license acquired for over five years.

Regionally, North America delivered gross margins of 32.75% and operating margins of 24.43%, with further growth expected following the acquisition of Confiz, which is anticipated to unlock cross-selling opportunities across its enterprise client base.

Europe outperformed with gross margins of 38.27% and operating margins of 29.89%.

In the Middle East, subsidiaries in the UAE and Saudi Arabia led the growth trajectory, contributing approximately 59% to total MEA revenue, while Qatar is expected to gain momentum and become a sizeable business in the near future, supported by a healthy backlog.

The Pakistan segment demonstrated a notable turnaround, achieving a positive operating profit margin of 7.3% compared to a loss of 6% last year, reflecting improved revenue quality, enhanced efficiencies, and cost optimization.

The company expects continued improvement in both top-line and bottom-line performance in the domestic market, supported by a strong pipeline.

Over the past two years, the company has made significant progress in upskilling its workforce in AI-enabled tools and technologies, enhancing productivity and enabling more value-driven client delivery.

This focus is expected to continue, alongside a transition toward a globally integrated talent model leveraging AI-driven recruitment and workforce deployment, allowing access to a broader talent pool across geographies and enabling scalable, high-quality service delivery.

A key milestone during the year was the completion of two strategic acquisitions, including Confiz and BAT Shared Services, which are expected to significantly strengthen the company’s market position and contribute to higher revenue growth, with full-year impact to be realized in the upcoming period.

In parallel, the company has scaled its Global Business Services (GBS) operations, particularly in relation to BAT, establishing a new growth vertical, while expanding engagement with partners such as Accenture.

The company continues to invest in infrastructure to support long-term growth, with a new office facility in Lahore currently in the planning phase and construction expected to commence in the second half of 2026.

The facility, with an estimated timeline of two years, will accommodate over 2,000 employees and includes dedicated parking infrastructure.

This expansion aligns with the company’s strategy to scale operations and enhance delivery capacity, while its Lahore office has been registered under the Special Technology Zones (STZ) framework to benefit from tax incentives, with a similar office acquisition underway in Karachi.

Looking ahead, Systems Limited enters the coming year with a strong foundation, supported by a healthy backlog, diversified markets, and clear strategic direction.

The company aims to pursue a balanced growth approach through organic expansion within existing client relationships, acquisition of new customers via partnerships with global technology leaders, and selective inorganic growth through strategic acquisitions.

Geographic diversification remains a key priority, with plans to scale operations in North America, expand presence in the UK and Europe through a regional hub, build momentum in APAC markets including Vietnam, Malaysia, and Indonesia, and further strengthen its footprint in the Middle East, particularly in the UAE and Saudi Arabia, while continuing to improve profitability in Pakistan and align margins with international operations.

By expanding capabilities in data engineering and system integration, embedding AI across client engagements, and strengthening alignment with global technology partners, the company is well positioned to sustain its growth trajectory in an increasingly digital and competitive global landscape.

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