Systems Ltd sees sustained growth from AI, MENA and Confiz synergies

KARACHI: Systems Limited (SYS) expects growth to remain supported by artificial intelligence-led spending, particularly in the Middle East, while the company is pursuing cross-selling and operational synergies from its acquisition of Confiz, management said during its analyst briefing on Thursday. Systems Limited’s profitability increased 17 percent year-on-year to Rs6.1 billion, or earnings per share (EPS) of Rs3.9, in 1HCY26, compared with Rs5.2 billion, or EPS of Rs3.3, in the same period last year. Revenue rose 35 percent year-on-year to Rs49.7 billion during the period. Revenue growth was recorded across all major regions, with APAC, North America, Middle East and Africa (MEA), Pakistan and Europe posting growth of 85 percent, 36 percent, 36 percent, 24 percent and 23 percent, respectively. Management said North American growth benefited primarily from the addition of Confiz, while APAC growth was driven by a one-off project. APAC, however, accounts for only around 5 percent of consolidated revenue. The MEA region remained the largest contributor, accounting for 57 percent of consolidated revenue, followed by North America at 20 percent, Pakistan at 13 percent, Europe at 5 percent and APAC at 5 percent. The company’s gross margin improved marginally to 25.5 percent in 1HCY26 from 25.3 percent in the same period last year, an increase of 20 basis points. However, margins declined from December 2025 levels due to currency appreciation and cost inflation. Management said Systems Limited had absorbed the impact of cost inflation and currency appreciation during the first half, but cautioned that continued appreciation of the rupee against the US dollar could put further pressure on margins. It expects margins to remain around 25-26 percent if the currency remains stable. The company has a structurally favourable currency exposure, with 94 percent of revenue denominated in foreign currency compared with 6 percent in Pakistani rupees, while around 56 percent of costs are denominated in rupees, providing a natural operational hedge. Management also attributed the decline in other income during the period primarily to currency appreciation and lower markup income on overdue receivables, following higher recoveries of outstanding dues. Systems Limited’s Pakistan operations continue to serve as its main delivery centre, accounting for 83 percent of total headcount, followed by the UAE at 10 percent, Egypt at 3 percent, Saudi Arabia at 2 percent and Qatar at 1 percent. The company also increased its base of large active clients, with the number of customers generating more than US$100,000 in revenue reaching 196 in 1HCY26, compared with 181 in the same period last year. Despite continuing geopolitical tensions in the Middle East, management said it had not experienced a slowdown in growth in the region. The UAE, Saudi Arabia and Qatar continue to represent significant growth opportunities, although management expects growth rates to normalize from the elevated levels seen currently. Systems Limited considers itself well positioned for the AI transformation, particularly at the enterprise level, with management describing the company as being in a favourable position to benefit from increased adoption of AI and generative AI. The company’s profit from the Telco segment, meanwhile, declined despite revenue growth during the period, which management attributed to lower-margin projects in the domestic market. Management said it views Pakistan as a growing market and plans to increase its focus on acquiring enterprise customers locally. On the Confiz acquisition, management said the company expects to realise synergies over the next two to three quarters. Confiz currently contributes around 25-30 percent of Systems Limited’s North American segment through its enterprise customer base, with the remaining contribution coming from Systems’ core business. Systems Limited also remains focused on diversification through strategic M&A alongside organic growth, particularly in the North American and European markets. Copyright Business Recorder, 2026