Exchange: SAU | Sector: Technology | Industry: Information Technology Services
Q1 2025
Published: Mar 31, 2025
Earnings Highlights
Revenue of $50.09M down 59.7% year-over-year
EPS of $0.01 decreased by 99.5% from previous year
Gross margin of 23.0%
Net income of 56.37K
"Transcript not provided." - N/A
Naseej for Technology Co (9538.SR) QQ1 2025 Earnings Analysis: Revenue Downshift amid Seasonality; Margin Stability with Modest Profitability
Executive Summary
Naseej for Technology Co reported QQ1 2025 revenue of SAR 50.09 million with a gross margin of 22.95% and an EBIT margin of 2.23%, yielding an EBITDA of SAR 1.30 million and a net income of SAR 56 thousand (EPS SAR 0.0113). The quarter marks a pronounced seasonality effect: revenue plunged from SAR 143.26 million in Q4 2024 to SAR 50.09 million in Q1 2025, implying meaningful quarter-to-quarter volatility typical of project-based IT services and transformation initiatives. The year-over-year metrics reflect a sharp reset in quarterly baselines and, despite a positive quarter, profitability remains thin with limited earnings visibility outside a favorable project mix. Management commentary is not captured in the provided transcript, which constrains directional guidance, but the quarterly profile suggests that sustained top-line improvement will hinge on pipeline execution, government and public-sector demand, and the conversion of shorter-term engagements into recurring or multi-quarter programs. Investors should weigh the potential upside from Saudi digital transformation initiatives against the current narrow profit pool and the pronounced quarterly cyclicality.
Key Performance Indicators
Revenue
50.09M
QoQ: -65.04% | YoY:-59.72%
Gross Profit
11.50M
22.95% margin
QoQ: -69.34% | YoY:-71.67%
Operating Income
1.12M
QoQ: -97.02% | YoY:-92.22%
Net Income
56.37K
QoQ: -98.88% | YoY:-99.49%
EPS
0.01
QoQ: -98.81% | YoY:-99.48%
Revenue Trend
Margin Analysis
Key Insights
Operating income SAR 1.12 million; operating margin 2.23% (0.0223).
EBITDA SAR 1.30 million; EBITDAR margin 2.60% (0.0260).
Net income SAR 56 thousand; net margin 0.11% (0.00113); EPS SAR 0.0113.
The four-quarter data highlights notable seasonality (Q4 2024 revenue SAR 143.26 million vs Q1 2025 SAR 50.09 million) and a material swing in profitability across quarters.
Weighting averages: 5.0 million shares outstanding (basic and diluted).
Financial Highlights
Revenue performance: QQ1 2025 revenue SAR 50.09 million; YoY change shown as -59.72% and QoQ change -65.04% in the provided metrics, underscoring a sharp quarterly normalization from a significantly stronger prior period. Gross Profit SAR 11.50 million with a gross margin of 22.95% (0.2295).
- Operating income SAR 1.12 million; operating margin 2.23% (0.0223).
- EBITDA SAR 1.30 million; EBITDAR margin 2.60% (0.0260).
- Net income SAR 56 thousand; net margin 0.11% (0.00113); EPS SAR 0.0113.
- The four-quarter data highlights notable seasonality (Q4 2024 revenue SAR 143.26 million vs Q1 2025 SAR 50.09 million) and a material swing in profitability across quarters.
- Weighting averages: 5.0 million shares outstanding (basic and diluted).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
50.09M
-59.72%
-65.04%
Gross Profit
11.50M
-71.67%
-69.34%
Operating Income
1.12M
-92.22%
-97.02%
Net Income
56.37K
-99.49%
-98.88%
EPS
0.01
-99.48%
-98.81%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript data not provided in the input. Therefore, no management quotes or theme-by-theme quotes can be drawn. Expected use of an earnings call would typically cover: strategy (portfolio focus on digital transformation, learning management, libraries digitization), operations (project cadence, pipeline conversion, mix of government vs private sector deals), and market conditions (Saudi Arabia’s IT modernization push, government spending cycles). Given the absence of a transcript, this section notes the lack of direct quotes and invites submission of the earnings call transcript for quote-backed synthesis.
Transcript not provided.
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Transcript not provided.
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Forward Guidance
No explicit forward guidance was disclosed for QQ2–QQ4 2025 in the provided data. In absence of stated targets, the outlook should be framed by the following considerations: (1) Saudi Vision 2030 and ongoing government IT modernization could expand demand for Naseej’s digital transformation, e-learning, and libraries solutions; (2) seasonality is pronounced, with Q4 historically stronger than Q1, suggesting that QoQ volatility may persist absent stronger pipeline execution; (3) profitability hinges on improving project mix, leveraging higher-margin services, and achieving higher utilization. Investors should monitor any disclosed backlog, pipeline metrics, contract wins in the public sector, and changes to pricing or scope that could alter margin trajectory. Potential scenarios range from stabilization of quarterly revenue around the low- to mid-50s SAR millions with margin expansion as project mix matures, to continued volatility if pipeline conversion remains tepid.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
9538.SR Focus
22.95%
N/A
N/A
N/A
9550.SR
20.50%
11.40%
5.82%
24.24%
7200.SR
20.20%
6.10%
7.40%
29.25%
7203.SR
41.20%
25.10%
9.03%
37.61%
ACN
32.90%
16.70%
7.81%
24.87%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Naseej presents a high-variance investment profile: meaningful exposure to Saudi digital transformation themes is a potential tailwind, but current QQ1 2025 results show a sharp quarterly downshift and extremely thin profitability. The stock could be attractive if the company demonstrates a credible pipeline conversion into higher-revenue, multi-quarter engagements, aided by Vision 2030-driven IT modernization and library/digitization initiatives. Key catalysts would include tangible contract wins, a clearer path to recurring revenue, and improved utilization against a stabilized cost base. Until such signals emerge, the risk-reward remains skewed to the downside given the disclosed quarterly volatility and weak near-term profitability relative to peers.
Key Investment Factors
Growth Potential
Long-run growth potential rests on Naseej’s core competencies in digital transformation, learning management, and digitization services, including libraries, museums, and knowledge resources. The Saudi public sector and large educational institutions present opportunities for multi-year programs that could elevate recurring revenue and improve visibility. Expansion into RFID-enabled library solutions and e-resources platforms may offer cross-sell opportunities into existing government and cultural accounts. A successful tiered services strategy (implementation, integration, managed services, and training) could lift gross margins and stabilize cash flow over time.
Profitability Risk
Key risks include pronounced quarterly seasonality, a narrow quarterly profitability window, and potential customer concentration in government-related projects. The lack of disclosed forward guidance and limited balance sheet detail heighten uncertainty around liquidity and leverage. Competitive intensity in IT services and digital transformation could pressure pricing and contract terms. Macro factors or delays in public sector procurement cycles could further dampen near-term growth.
Financial Position
Available data primarily covers income statement items for QQ1 2025; balance sheet, cash flow, and debt metrics are not provided. As a result, assessments of liquidity, working capital health, and leverage are not feasible from the current dataset. The tiny net income and modest EBITDA in the face of seasonality imply limited internal cash generation in the quarter, which could affect near-term liquidity if receivables dominate or working capital requirements rise.
SWOT Analysis
Strengths
Specialized IT services with capabilities in digital transformation, learning management, and knowledge resources.
Experience servicing government, public, and cultural institutions, which aligns with Saudi modernization initiatives.
Naseej’s position in library digitization and RFID technologies complements broader digital transformation trends.
Weaknesses
Significant quarterly revenue volatility and a very narrow quarterly profitability window (QQ1 2025 net income SAR 56k on SAR 50.09M revenue).
Limited visibility into balance sheet strength, liquidity, and leverage due to unavailable balance sheet data.
Low net profitability and thin margins relative to some peers, indicating potential cost-structure or project-mipeline mix constraints.
Opportunities
Public sector and education market expansion driven by Vision 2030, with opportunities to secure longer-term, higher-margin contracts.
Cross-sell and scale opportunities in RFID-enabled libraries, e-resources, and digitization projects.
Potential to convert project-based engagements into recurring managed services or SaaS-adjacent offerings, improving revenue predictability.
Threats
Competitive pressure in IT services and digital transformation space could compress margins.
Seasonality and project-based revenue make quarterly performance volatile; delays in procurement cycles could hurt short-term results.
Concentration risk in government/public sector clients and potential policy or budgetary changes.