Systems Limited (SYS) made net additions of 827 IT professionals during 2022. The number of employees at the end of 2022 stood at 6,147 compared to 5,320 at the same time last year. 84% of employees are based in Pakistan, and the rest are from the Middle East.

Service segmentation of revenue includes 76% from digital, 18% from managed services and 4% from BPO. To note, over the years contribution from BPO has come down from 40% to just 4%. The focus of SYS is now towards the Digital services segment.

Geographical segmentation of revenue stands at 47% from Middle East, 29% North America & Europe, 22% for Pakistan and the remaining 2% from Asia Pacific. Middle East has been the fasted growing region for the company.

Number of clients of the company has increased rapidly with the company serving 191 clients in 2022 compared to 129 in 2021. Number of clients with spend in a range of US$0.5-5mn has also increased to 53 compared to 28 last year.

The revenue mix by currency stands at US$81%, PKR16% and 3% Euro while the cost mix is 70% PKR and 30% US$ in 1Q2023.

Trade debts jumped to Rs8.5bn at the end of 2022 from Rs4.1 at the end of2021 and management expects them to gradually decline over the remainder of the year.

In 2022, SYS sold CLOS of Ndc Tech at a price of US$15mn. To highlight, total acquisition cost of Ndc Tech was US$31mn.

Revenue has grown by 49% YoY in US$ terms excluding the one off transaction of CLOS. Gross, Operating and EBITDA Margins stand at 30%, 19% and 21% respectively in 2022.

Management commented that lower margins were due to one time transaction of CLOS and higher amortization for CMB (Temenos) software.

Under the capital allocation policy, SYS focus would be on (1) reinvestment in growth which includes organic growth, talent acquisition, strengthening current geographics and new offerings, (2) mergers and acquisitions, and (3) cash and stock dividends.

Courtesy – Topline Research

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