• Systems Limited (SYS) management held an analyst briefing to discuss 9MCY25 results and the company’s outlook, according to a report released by AHL Research.
• In 9MCY25, the company posted a profit after tax (PAT) of PKR 7,944mn (EPS: PKR 5.42), up by 46% from PKR 5,432mn (EPS: 3.71) in 9MCY24.  On a quarterly basis, in 3QCY25, the company reported a PAT of PKR 2,792 (EPS: 1.91), up by 28% YoY and 5% QoQ. The increase was primarily driven by higher technology services exports and improved gross margins.
• It was clarified that the Confiz transaction is a 100% share swap with no cash consideration, meaning Systems will not deploy cash for the acquisition, and Confiz will retain sufficient working capital to continue operations without additional funding from Systems.
• The acquisition will be executed through a court-approved scheme of arrangement, with an expected timeline of approximately three months for regulatory approvals, and an effective consolidation date targeted for January of the following year.
• Management disclosed that approximately 3.8% to 4.0% of Systems’ shares will be issued as part of the transaction, subject to regulatory and court approvals, resulting in dilution of around 4%, while Confiz contributes roughly 10% to Systems’ revenues and profitability on a relative basis.
• Management confirmed that Confiz’s revenue per employee is generally higher than Systems’ average, reflecting its greater exposure to North American and European markets, where billing rates are structurally higher than in Pakistan or the Middle East.
• It was clarified that there is minimal overlap between Systems’ and Confiz’s client bases, particularly because Confiz’s core business is in the US and Europe, while Systems’ historical strength has been in the Middle East and other regions.
• On margins, management acknowledged that currency stability and rising costs put pressure on exporters, but emphasized that Systems has optimized operations to sustain margins, noting that prolonged currency appreciation or stagnation could impact margins. The company continues to manage costs proactively.
• Management addressed questions on impairments, clarifying that provisions booked in the third quarter were routine IFRS 9 expected credit loss provisions on receivables, reflecting a conservative accounting approach rather than actual write-offs.
• The BAT-related transaction was discussed, with management confirming that operations commenced in November and integration has been seamless so far, with no major disruptions reported, and that this acquisition added a new specialized BPO and shared services vertical rather than traditional low-end BPO.
• Management provided an update on Pakistan’s domestic business, stating that loss-making local contracts are being systematically exited and that Pakistan is no longer expected to be a loss-making unit, with a renewed focus on profitability rather than subsidized, training-driven losses.
• On the growth outlook, management reiterated that Systems remains in hyper-growth mode and will continue to pursue inorganic opportunities opportunistically, both in Pakistan and internationally, particularly in the US and UK, where acquisitions can accelerate market penetration.

Courtesy- AHL Research