Operator: Q&A. For the Q&A session, participants can either raise their hand or type in the questions in the Q&A chat. Without any further delay, I would hand over the mic to Mr. Abdullah, GM of Corporate Finance and Investor Relations, for introduction of the management and for the presentation. Over to you, Mr. Abdullah.
Abdullah Dayel: As-salamu alaykum wa rahmatullahi wa barakatuh. Thank you, Mohammed, and thank you everyone for joining us today. Before we begin, I would like to remind everyone that today's presentation and our financial disclosures are available in the Investor Relations section of our corporate website. This is Abdullah Dayel, General Manager for Corporate Finance and Investor Relations, and today on the call, we have Soliman Almahmoud, General Manager for Corporate Strategy and Management, and Muhammad Urooj Khan, Finance Director. The agenda for our call today will include six parts. First, we will briefly discuss the key milestones achieved since the beginning of the year. Then we will update you on the key investment highlights of solutions by stc. Afterward, we will review our financial performance for Q3 and nine months of 2026. We will then update you on our guidance for 2026. Finally, we will open the floor for the questions.
Abdullah Dayel: On this slide, we show our key milestones achieved since the beginning of the year. However, we already discussed H1 2026 events on the previous earning call, so let us focus on the most recent key developments. During Q3 2026 and October, solutions continued to expand its contract portfolio across key technology verticals, securing new agreements in data centers, education technology, cloud services, and digital banking, alongside an important development for our shareholder. In August, we signed a SAR 364 million contract with center3 for the development of data center in Dammam. This further strengthened our presence in the Kingdom's growing data center market, with financial contribution expected to be on Q1 2027. Also in August, we signed a five-year revenue share agreement with Tatweer Education Holding through TETCO to develop and operate the Madaris Education Platform.
Abdullah Dayel: This is an important agreement that expands our presence in the education technology sector and provides an opportunity to generate revenue through a long-term platform-based model. The potential contract value may exceed 10% of our 2025 revenue, and this is subject to the actual revenue generated under the agreement. We expect the financial contribution to be started from Q1 2027. In September, we signed an agreement with National Housing Company to provide a host and cloud services for 14 government platforms, further strengthen our cloud services portfolio. Also in October, we signed SAR 190 million contract with stc Bank to provide managed services, SMS, over a two-year period, with the financial contribution expected to be from Q4 this year. Finally, in October, on the Extraordinary General Assembly Meeting, our shareholder approved 100% capital increase through one-to-one bonus share issue, following the board recommendation in April 2026.
Abdullah Dayel: This will double our share capital from SAR 1.2 billion to SAR 2.4 billion through the capitalization of retained earnings, without requiring additional cash contribution from shareholder. This decision aligns our capital structure with the company long-term growth and expansion strategy. We believe these developments highlight our continued ability to secure major contracts across different technology verticals, deepen our presence in strategic sector, and support further growth opportunities. Moving to the investment thesis. Our investment thesis remain intact. Solutions continue to take advantage of its market leadership and operate a highly efficient business model, which delivers strong returns on capital through the cycle cash flow generation and attractive dividend. This shapes Solutions' compelling investment case, which rests on the following pillars. The company maintains a leading position in the Saudi IT service market, supported by a long-term relationship with the public and private sector clients.
Abdullah Dayel: A sizable and diversified backlog of projects reflects a strong customer reach and provides a foundation for our future revenue generation. Our consolidated backlog continued to show a steady growth, having reached SAR 14.6 billion as of September 2026, compared to SAR 14.5 billion as of end of H1. Solutions always generate return on invested capital well above our cost of capital, which indicates the efficiency of our business model and superior value creation. Over the past five years, our average return on invested capital remained above 30%. Our diversified product offering, disciplined cost management, and strong execution support resilient profitability with EBITDA margin averaging around 16% over the past five years. Our asset-light business model has modest capital requirements, which historically remained below 2% of revenue on average, providing financial flexibility and supporting attractive returns.
Abdullah Dayel: Solutions have a strong track record of cash flow generation through the cycle, supported by our resilient business model and disciplined working capital management. It is worth mentioning that over the past five years, our average free cash flow conversion stood approximately 67%. We maintain a robust balance sheet with a net cash position of SAR 429 million as of September, providing flexibility to finance organic growth, potential acquisition, and deliver a sustainable return to our shareholder. Finally, the company offer an attractive dividend profile supported by consistent shareholder distribution over the past years. For 2025, we paid a dividend of SAR 8 per share in June 2026, implying a payout ratio approximately 63% of the net profit, in line with the five years average.
Abdullah Dayel: With that, I would like to thank you, and let me now hand it over to my colleague, Muhammad Urooj Khan, our Finance Director, who will take you through our financial results for the nine months. Muhammad, please.
Muhammad Urooj Khan: Thank you, Abdullah. Hello, everyone, and thank you for joining us today. I will take you through our financial performance for the first nine months of 2026, and then close with an update on our full-year guidance. Overall, Solutions posted solid revenue growth, improved its EBITDA margin, and generated positive free cash flow during the period. Revenue increased 9% year-on-year to approximately SAR 9.64 billion. This was supported by efficient delivery across projects secured in 2025, together with contribution from new projects as they moved into execution. Gross margin stood at 42%, which is 47 basis points lower year-on-year. The movement reflects the mix and milestones recognized during the period, with various milestones carrying different profiles. EBITDA grew 11% year-on-year to approximately SAR 1.67 billion, while the EBITDA margin increased by 23 basis points to more than 17%.
Muhammad Urooj Khan: EBITDA therefore grew ahead of the revenue, reflecting continued operating cost efficiency, which more than offset the slight movement in gross margin. Net profit attributable to shareholders increased 1% year-on-year to approximately SAR 1.25 billion, with a net profit margin of around 13%, approximately. The more moderate growth relative to EBITDA mainly reflects higher net finance costs and other expenses, including costs associated with an early retirement program that we have in place. Capital expenditure declined 6% year-on-year to around SAR 116 million, representing only 1.2% of revenue and remaining consistent with the asset-light nature of our business, as Abdullah just mentioned. Together with focused working capital management, this supported positive free cash flow of around SAR 222 million, compared with a cash outflow a year ago. Finally, returns remained strong.
Muhammad Urooj Khan: Return on invested capital reached approximately 33% for the first nine months, while return on assets employed stood at around 39%. The overall picture is one of continued growth, improved operating efficiency, and sustained cash generation. With that, let us move to an in-depth view of performance. Revenue momentum remained solid during the first nine months, supported by continued execution of existing projects and new wins. As I mentioned, group revenue increased 9% year-on-year to SAR 9.64 billion. The growth came from multiple business lines as previously secured contracts moved through active implementation and delivery stages. Looking at the segments, Core ICT services remained our largest contributor and strongest growth driver. Revenue increased 20% year-on-year and represented around 52% of total revenue. This growth reflects accelerated execution and the achievement of key milestones across projects secured during 2025 and also 2026.
Muhammad Urooj Khan: IT Managed and Operational services grew 2% year-on-year in the first nine months. The more moderate growth reflects a high comparison base in 2025, when the segment benefited from revenue recognition under a sizable contract with a strategic customer. Digital services revenue declined 6% year-on-year over the nine-month period. This was due to project-based nature of a significant part of the portfolio, resulting in uneven project delivery and revenue recognition. The quarterly trend improved in Q3, with Digital services revenue growing 5% year-on-year. Overall, the group remains well diversified across business segments, where Core ICT continues to lead growth, while the performance of other two segments reflect their delivery models and milestone profiles. Let us look at the revenue contribution by entity.
Muhammad Urooj Khan: Solutions Standalone remained the largest contributor, representing 66% of total revenue in the first nine months, and grew 6% year-on-year, supported by continued execution of projects secured during 2025 and 2026. Quarterly revenue can vary with the timing of project milestones, but the business continued to grow during nine months period. Upsource revenue increased 7% year-on-year, supported by new project wins and also gradual ramp-up of engagements secured over the past year. The progress became more visible in Q3, when Upsource revenue grew 19% year-on-year as more projects moved beyond mobilization into active deliverance. Pulse delivered 31% year-on-year revenue growth in the first nine months, supported by strong execution and achievement of key project milestones across its entities, both in Saudi Arabia and North Africa. This momentum continued in Q3, with Pulse revenue increasing 30% year-on-year.
Muhammad Urooj Khan: Pulse continues to pursue opportunities through its own go-to-market and jointly with Solutions, allowing the group to benefit from broader customer access and shared delivery capabilities. Overall, the group remains well-diversified across its entities and service offerings. Let us now move to revenue mix by customer type. Our customer mix remained well-balanced across government, private, and stc. Government remained the largest customer segment, with revenue growing 4% year-on-year and representing 42% of the revenue, compared with 44% in the first nine months of last year. Q3 government revenue remained broadly flat year-on-year, primarily reflecting project phasing rather than a change in the underlying opportunity base. We continue to improve resource mobilization and delivery planning across portfolio. Although milestone-based nature of these projects means some quarterly variations can still occur.
Muhammad Urooj Khan: The private sector maintained the strongest nine-month momentum, with revenue increasing 17% year-on-year. Its share of revenue rose to 25% from 23% a year ago. Q3 growth moderated to 8% year-on-year, and this primarily reflected a higher comparison base from a significant customer contract in Q3 2025. This was coupled with timing of project milestones that were delivered during the current quarter. Revenue from stc increased 11% year-on-year in the first nine months, supported by a strong pickup in Q3 as projects progressed into more advanced execution phases. Q3 revenue from stc increased 25% year-on-year, while stc's share of group revenue remained unchanged around 33%. Overall, the customer mix continues to provide a balanced contribution across the group, with growth coming from each of our three main customer categories over the nine months period.
Muhammad Urooj Khan: Let's now look at the profitability. Gross profit increased 7% year-on-year to SAR 2.12 billion, while the margin stood at 22%, a slight decline of 47 basis points year-on-year. In Q3, gross profit grew 5% year-on-year to SAR 742 million, while the margin approximated to 22%, compared with 24.3% in Q2. The quarterly movement reflects the mix and margin profile of project milestones recognized during the period. Different milestones contribute at different margin levels depending on the scope and stage of delivery, so margin pattern is not necessarily linear between quarters. Gross margin remains within our historical range, and the underlying movement continues to reflect the mix of revenue and recognized project milestones. Now, let's look at gross profit contribution by entity. Pulse and Upsource were the main drivers of gross profit growth during the period.
Muhammad Urooj Khan: Pulse generated the largest year-on-year increase, supported by strong revenue growth and margin enhancement. Upsource also delivered strong growth supported by higher revenue, while its margin remained broadly stable in Q3. Solutions Standalone remained the largest contributor because of its scale, although gross profit declined slightly year-on-year in the first nine months. The margin moderated in Q3, reflecting the mix and margin profile as I just mentioned a while back. Overall, contribution from Pulse and Upsource broadened the source of gross profit growth, while Solutions Standalone continued to provide the largest profit base. Next slide, please. EBITDA increased 11% year-on-year to around SAR 1.67 billion, while EBITDA margin expanded by 23 basis points to 17.3%.
Muhammad Urooj Khan: The key point is that EBITDA grew faster than revenue, and this was supported by operating expenses increasing only by 3% year-on-year, well below 9% growth in revenue. As a result, OPEX declined as a percentage of revenue and created positive operating leverage. Most of these cost savings came from revised royalty terms with stc and optimization of other operating expenses as well. Turning to the bottom line, net profit attributable to shareholders increased 1% year-on-year to around SAR 1.24 billion, with a net profit margin of around 12.9%. The more moderate growth compared with EBITDA and operating income reflects higher net finance costs and other non-operating expenses, which includes costs associated with an early retirement program, which is a part of group's talent optimization initiative.
Muhammad Urooj Khan: While some below operating line items limited the conversion of EBITDA growth into net profit, the underlying operating performance remained solid during the period. Let me now cover balance sheet and working capital briefly. Working capital continues to reflect the timing differences, which is normal for our project-based business model. At the same time, we remain focused on improving collections, optimizing supplier payment terms to support capital conversion. Working capital remained broadly stable year-on-year at SAR 3.58 billion as at the end of Q3. During the quarter, accelerated project delivery moved ahead of certain billing milestones. This temporarily reflected in contract assets and receivables before the related amounts moved through billing and collection. Account receivables stood at SAR 4.47 billion, with receivable days at 103, and remained below the full year 2025 levels.
Muhammad Urooj Khan: Accounts payable increased to SAR 4.95 billion, while payable days reached 161, reflecting continued optimization of supply and payment terms. Looking at the receivable mix, government represented the largest share at approximately 47%, followed by stc at 27% and private sector at 26%. Overall, working capital remained stable despite the temporary movement between execution, billing, and collection during the quarter. Let us now look at how these movements translated into cash flow. Operating cash flow reached around SAR 466 million in the first nine months, compared with the cash outflow in the same period last year. The year-on-year recovery was mainly supported by improved collections and optimized payables, reflecting our continued focus on working capital management and payment discipline. Capital expenditure declined 6% year-on-year to around SAR 116 million, and reflected the timing of internal investments and our asset-light operating model.
Muhammad Urooj Khan: This resulted in a positive free cash flow of SAR 222 million, compared with a cash outflow of SAR 623 million in the first 9 months of last year. Our net cash position stood at SAR 429 million as at the end of the reporting period. This movement mainly reflects SAR 953 million of dividend payment that is attributable to the financial year 2025, together with SAR 135 million of acquisition of an additional around 11.8% of stake in Pulse. Overall, cash generation can still fluctuate between quarters because of the timing gap between execution, billing, and collection. The 9-month results nevertheless represent a meaningful improvement from prior year outflow. Moving on to the next slide, please. Solutions continues to generate strong return on capital while maintaining an asset-light model and a healthy balance sheet.
Muhammad Urooj Khan: Return on invested capital reached 34.6% in Q3, and at 32.9% for the first 9 months. Both levels remain well above the company's cost of capital, reflecting efficient capital deployment and disciplined investment across the business. The asset-light model continues to support these returns, with capital expenditure representing only 1.2% in the first 9 months. As I just mentioned, we paid SAR 953 million in dividends for the 2025 financial year. This represented SAR 8 per share and a 63% payout ratio, and reflects our continued commitment to shareholder returns. Finally, let me just provide you an update on our 2026 guidance. Our strong backlog of more than SAR 14.6 billion, supported by healthy pipeline, continues to provide solid revenue and profitability outlook.
Muhammad Urooj Khan: We therefore reiterate our full-year 2026 guidance of 6% to 8% of revenue growth and EBITDA margin of 14% to 16%, and organic capital expenditure of 2% to 3% of revenue. That is the end of our presentation. Now we invite you to ask any questions that you may have. Thank you.
Operator: Thank you, management. Attendees, you can now either raise your hand or type in your questions in the chat. Our first question comes from the line of Cesar. I am unmuting you. Please introduce yourself and ask questions.
[Analyst] (Bank of America): Yes. Hi, good afternoon, everyone. This is Cesar from Bank of America. Thanks for the insightful presentation and the opportunity to ask questions. I have three, but I think they are very easy. The first one, just wanted to check why you did not revise up your guidance for 2026. I think the implied Q4 growth is probably close to zero or 1% if I take the midpoint of your full year guidance. So why would you expect Q4 revenue growth to decelerate so much? Is it probably due to the ongoing geopolitical situation and probably more difficult to forecast, or is there anything else? That is the first question. The second question, I think one or two quarters ago, you have talked about this opportunity of setting GPU as a Service. Just wanted to check how is that going.
[Analyst] (Bank of America): Then the third one, it is really if you can give a little bit more details on this Madaris platform. I think it is quite interesting. It looks to me that this is a recurring revenue type of product, which is quite interesting. Can you share a little bit more light on how the revenue recognition will work? When are you going to start to recognize revenue from it? I think you have disclosed already that it could be as much as 10% of the, I think, 2026 revenue, but on a five-year basis. If you can give more details, that would be much appreciated. Thank you so much.
Muhammad Urooj Khan: Thank you, Cesar. I will take your first question and then probably we will leave the rest for Soliman. You are absolutely right about the current situation. But the backlog that we are disclosing, which is close to SAR 14.6 billion, that provides solid visibility. It comprises the contracted work scheduled across different delivery periods. While you are right in highlighting the present geopolitical situation, I think we are in a very strong position to deliver on the contracted backlog that is obviously a liability on solutions to deliver on. But on your part for Q4 guidance, nine months' performance is obviously ahead of the full year ranges. I understand that. But the guidance is provided at a full year level and should not be reverse engineered into a specific Q4 revenue or margin forecast.
Muhammad Urooj Khan: Because of our milestone-based business model, quarterly revenues and margins can vary depending on the timing and the mix of milestones recognized that we have mentioned many a times. This is the reason why we are still maintaining our 2026 guidance without providing any further insight on to quarterly guidance. I hope that helps you.
Operator: Yes.
Soliman Almahmoud: Taking the second question, Cesar, if I would have answered the first question fully. For GPU as a Service, yes, the service has come live this quarter, and we started to see revenue generation from the service. However, it will take time to ramp up and to utilize all of the capacity that we have built, as well as we are exploring avenues to expand our capacity as we see any good demand in this service. We are optimistic about the use cases that we can generate from this base infrastructure solution, Inshallah. When it comes to Madaris contract, yes, it will be a recurring kind of engagement. There are certain revenue streams that have been locked in in the contract where pretty much it is to a large degree expected on annual basis.
Soliman Almahmoud: However, what we are most excited about is that the access to this platform will provide us with exposure to generate many new revenue streams. This platform will give us access to around 1.2 million Saudi students. We could develop any new products that could be cross-sold and upsold in this platform. We are really optimistic about the potential of this platform and how it could impact our financials. It takes back to start impacting us in 2027, probably mid-year, more or less. However, teams are in the ground and trying to accelerate revenue generation as much as possible.
[Analyst] (Bank of America): Thank you so much. That was super insightful. Just a very quick follow-up. Would it be possible in the future to see more of this product-based revenue streams which are more recurring? Is this something that you are working on or do you think that is just a one-off?
Soliman Almahmoud: No, this is actually core and center to our strategy. We have been investing heavily in resources and internally with a dedicated team for PPP opportunity, the revenue share opportunity, which is focused mainly on these kind of opportunities, digital platforms that are revenue generating in a recurring manner. The team has a very healthy pipeline. We are submitting a lot of opportunities and we are exploring with several clients similar options, Inshallah.
[Analyst] (Bank of America): Thank you so much. Thank you.
Operator: Thank you. Our next question comes from the line of Ankur Agarwal. I am unmuting you. Please unmute yourself locally, introduce yourself, and ask your question.
Ankur Agarwal: Thank you for the opportunity. Ankur Agarwal from HSBC. My question really is that, how should we think about M&A opportunities in current times in the local market? Obviously there is an ongoing conflict. Do you see more value emerge in some of these smaller assets, or you would be conservative in these times?
Soliman Almahmoud: Can you explain the last part?
Ankur Agarwal: That is my first question.
Soliman Almahmoud: What about smaller assets? Which assets do you mean?
Ankur Agarwal: I am saying, in this environment, would you accelerate your M&A ambitions in terms of acquiring assets? Have you seen value emerge in some of the potential targets amidst this geopolitical backdrop?
Soliman Almahmoud: Sure. Yes, the geopolitical situation is affecting certain parts of the industry. Be it whether client spending, we see some shifting into where people are spending their money, some reductions here and there or optimization, as well as some different behaviors in spending, where we have seen some clients shifting their spending into the DR recovery solutions, satellite and connectivity services, et cetera. That is one. Where it comes to M&A, as we have just said previously, we are actively looking for targets. We have defined several domains that will be viable for acquisition that will consolidate our capabilities. We have not seen any opportunity arise just because of the conflict. However, we are looking always for these targets.
Ankur Agarwal: All right. My second question is, can you talk a bit about what really happened to the receivables situation in Q3? Anything to worry about, and should we be worried about increase in receivables or ECLs, given what we have been seeing in October?
Muhammad Urooj Khan: Thank you, Ankur, for asking the question. Look, the higher contract asset or receivables across different segments is driven by a one-off, or should I say more reflecting the slight difference between how milestones are being delivered versus obviously the billing schedule and then the collection cycle. This is something that is going to normalize over the upcoming quarters. This does not reflect any structural deterioration in the quality of the receivables. In fact, if you have had the opportunity to look at the financial statements disclosure, the expected credit loss for solutions has actually seen a reversal, and that is because of collection of even receivables that were previously provided for. As far as the performance collection and how the buckets are aging, we do not see any structural issue with that.
Ankur Agarwal: All right. Thank you. One final question, really. Can you give us a sense of the percentage of revenue that comes from the backlog in any particular year and the percentage that you can probably call quick turn revenue or something?
Muhammad Urooj Khan: Yeah. Soliman just touched base on it, but not maybe on the percentages. We are talking about 35% to 40% from recurring versus the remaining 60% to 65% from project-based engagement. Having said that, this is deliberate, where project-based revenue provides scale and growth while the recurring revenue improves visibility and more stability. It is like moderating revenue volatility, but still it cannot be completely eliminated because still a big chunk of the revenue is comprised of milestone-based revenue recognition.
Ankur Agarwal: Okay. Final one. I think SAR 1.4 billion Aramco contract, has it started contributing to the revenue, or should we expect that in Q1?
Soliman Almahmoud: This will happen in 2027. We cannot disclose the exact time. However, we do expect in 2027 delivery will commence. It is highly linked with vendors and shipping of material for this project.
Ankur Agarwal: All right. Perfect. Many thanks for patiently answering all my questions.
Operator: Thank you. Our next question comes from the line of Mr. Khalid. I am unmuting you. Please go ahead with your question.
[Analyst] (SNB Capital): Am I audible?
Operator: Yes.
[Analyst] (SNB Capital): Thank you, management, for the presentation. I have two questions. My first question is regarding Remat project. Can you update us on the project and if you can give some quantification about the revenue that is coming from the project? My second one is regarding the backlog, and we have been growing our backlog despite the fact that Etimad tenders are slowing down. Is the new backlog driven by the private sector rather than the governmental sector? That is mainly it. Thank you.
Soliman Almahmoud: Thank you, Khalid, for your question. In regards to Remat, we have nearly made all parking spots operational and chargeable. Currently, we are working with our partner, Remat, more on the enforcement side, ensuring that we can extract as much value as possible out of these parking spots, as well as we are collaborating on other revenue streams as much as possible to expand and create value out of this engagement. When it comes to the backlog, Etimad is not the only government channel for procurement for us. We work with the entirety of the Saudi government. Some of them are using Etimad as their only procurement channels, where others have other means in order to contract private sector, such as we are using these channels. Yes, there is growth in our private sector bookings.
Soliman Almahmoud: There are many deals such as the Aramco deal and the NWC deal that we signed at the beginning of the year. We are also scoring any good business with the government as well to maintain our backlog. Khalid, from which entity?
[Analyst] (SNB Capital): SNB Capital.
Soliman Almahmoud: Great. Thank you.
[Analyst] (SNB Capital): My last question is regarding the receivables and contract assets. Is there any delays from stc Group or is it mainly government?
Muhammad Urooj Khan: There has been no delay either in stc and or government or any other segment. So, the quality of receivable is intact, and it is just that the delivery is getting ahead of the billing and the collection cycle slightly.
[Analyst] (SNB Capital): Very clear. Thank you so much, management. Tawfiq.
Operator: Thank you. Our next question comes from the line of Roman. Please introduce yourself and ask your question.
[Analyst] (Goldman): Hi. Thank you for taking my question. This is Roman from Goldman. Just a quick question from my side. On the stc growth, which has been very strong within the mix and particularly in Q3. Would you say that quarter delivery was driven by some milestone project timing? If you can comment what growth from the stc should we expect for Q4 and maybe you have visibility for 2027. Thank you.
Soliman Almahmoud: When it comes to revenue volatility, as we have explained, usually we have a bit of a stable reoccurring revenue, and then the rest is based on milestones and product delivery. So every quarter there is a fluctuation depending on which products are completed, their size and business, and in which sector. When it comes to how we would perform with stc, we really cannot disclose. We are sticking to our overall guidance on the corporate level that will be achieved Inshallah by year-end. We always ensure that there is growth as much as possible across the different segments, as the nature of our business is there.
[Analyst] (Goldman): All right. Thank you very much.
Operator: Thank you. Our next question comes from the line of Eugene. I am unmuting you. Please introduce yourself and ask a question. A brief
Evgenii Annenkov: Sorry?
Operator: We cannot hear you. We cannot hear you, Eugene. You need to unmute yourself and ask a question. I believe there is some issue from this side. The next in line is Karin. I am unmuting you. Please go ahead, introduce yourself and ask a question.
Karin So: Hello, can you hear me?
Operator: Yes.
Karin So: Perfect. Thank you very much. Thank you for the opportunity to ask questions. This is Karin So from JPMorgan. I have 2 questions, please. The first one is about the quarterly seasonality. I recall, at your Q2 call last time, you were talking about some efforts made to pull some of the project earlier into earlier part of the year, and make it more uniform across the year. I guess, has that been happening in Q3, as well, and does it change how we should think about the shape of the year going forward? The second question is on the early retirement cost. Can I please clarify, is the SAR 20 million booked in the quarter the full cost or should we expect further charges in the coming quarters? I guess what do you see as the annualized cost maybe, please?
Karin So: Thank you very much.
Soliman Almahmoud: Yes, as we have explained previously, we are working tirelessly to make sure that we utilize our workforce throughout the year as much as possible. With this, the side good benefit is more uniformity on quarterly revenue. However, we do not entirely control this due to that a lot of revenue also is linked to hardware and software which will be recognized at the point in time when the delivery is delivered to the client. Hence, that is why we have confirmed that the revenue performance will be sticking to our annual guidance, even though the growth has been a bit higher in this quarter especially. Bo Hamdan, if you could take the next question. Karin, if you would just confirm, your second question was about the early retirement program, right?
Karin So: Yes, exactly. Curious if that is the full cost or should we expect any additional ongoing cost?
Soliman Almahmoud: This is a very elaborate program, which is centered around, obviously, strengthening the capability-based skill set of the workforce, while at the same time recognizing the employees that perhaps are outgoing. I cannot guide you specifically on quarter on quarter program details because this is very well thought. But yeah, this is a continuous engagement that we are conducting.
Karin So: Understood. Thank you very much.
Operator: Thank you. Next, we have questions from the line of Mr. Abdulaziz. Please introduce yourself and ask your questions.
[Analyst]: Yes. Hello, management. Thank you for this presentation and congratulations for the results. I have two questions. First one is regarding the Madaris platform. If you could shed light on how exactly is your commission or revenue shared basis is earned, because is it in tuition fees paid through the platform or through the financing part? Because I see there is a financing part in the platform. Do you carry any credit exposure to that? As I have seen, given the registration is still voluntary in the platform, do you see a much higher upside to the disclosed amount if it comes mandatory? Because I see in the platform, in the Q&A box, it says that at the moment it is not mandatory. So, it kind of hints that there is some discussions that Madaris could be mandatory in some way. I will ask the next question after.
Soliman Almahmoud: Thank you, Abdulaziz. The Madaris platform has several revenue streams. Some have been inked in the contract and most are agreed upon, and some are open-ended where we will do business development and expand our revenue streams in it. There is a revenue stream around transactions and the contracts. Yes, it is not mandatory, but we have agreed with the partner around when this will be mandatory and how this would be reflected in the business case. Other services such as the financing, et cetera, are under development and we are examining what is the best exposure for us. Given that we are an IT company, not a financing company, how can we partner with other entities in order to deliver this to the beneficiaries in the platform and create the most value for our shareholders.
[Analyst]: That is clear. Lastly, I just want to see your point of view and hear from you. Your awards in 2026, if we took all the awards in 2026 only, it is an amount of SAR 4.5 billion signed which we will see around SAR 2.4 billion landing in 2027. I want to ask, do you see it the same way we are seeing it now that 2027 actually could be a good year for growth in terms of revenue-wise for solutions? I know that some of the projects will be delivered in 2026. However, still the number is huge, and it is of course led by the Alankit contract and the potential of Madaris actually reaching to its potential. I just want to hear from you regarding that.
Soliman Almahmoud: Abdulaziz, just to understand, you took up all of our announcements and added them up to arrive at the 4.5?
[Analyst]: Yes. If we are talking about how much is going to land in 2027, it is 2.4, if we divide it quarterly and starting from effective date.
Soliman Almahmoud: What is exactly that was divided quarterly?
[Analyst]: For example, the Alankit contract, it should contribute starting from Q1. This is a full contribution for Alankit contract in 2027. The other contract is the same way. If they have full contribution, like if it contributes for 30 quarters, we will take the quarters that only in 2027.
Soliman Almahmoud: I think there is not enough public information to lead to that conclusion. However, our commitment is that we will deliver stable growth in 2026 and 2027 in alignment with our guidance. We rely largely on our backlog as we highlighted, the higher ratio is in the backlog, as well as new contracts, whether awarded in 2027 or 2026. We will keep it at that.
[Analyst]: Okay.
Operator: Thank you. I believe Evgenii wants to ask a question. Unmuting you. Please go ahead.
Evgenii Annenkov: Hi, can you hear me now?
Operator: Yeah. We can hear you.
Evgenii Annenkov: Apologies for the first time. Yeah. It's Evgenii Annenkov from Jefferies. Thank you for taking my questions. I have two. First one is on your new contracts with center3. Can you please discuss if there are any changes in the role that solutions is playing within stc perimeter, in terms of data center build-out? Would you expect also to get some contracts from center3 associated with the upcoming JV with HUMAIN? Lastly on this one, for this type of contracts for data center build-out, what is the expected CapEx intensity? My second question would be on Pulse. You have mentioned that African business is also driving the growth. Just wanted to understand what is its current contribution to Pulse revenue, and do you expect it to increase over time? Thank you.
Soliman Almahmoud: Thank you, Evgenii. In data centers, we do offer services in fit-out and build of data centers, covering both active and non-active components. We're always looking for the right opportunities in the market to deliver these services. With center3 and HUMAIN partnership, we're working on obtaining part of the business. However, this is subject to a lot of variables and we're working the normal cycle of business as with sister companies, and we apply arm's length practices in order to ensure fair business practices. When it comes to Pulse and African distribution, I'll leave that to Mohammed and Uche.
Muhammad Urooj Khan: Yes, Evgenii, you are talking about Giza, KSA versus non-KSA contribution. Correct me if I am wrong.
Evgenii Annenkov: Correct. Yes. Thank you. Yeah.
Muhammad Urooj Khan: Yeah. You are talking about in the range of 30/70 towards KSA and 30 in the non-KSA. But it oscillates between this range and can move. Yeah. There are obviously growth prospects from the North Africa region as well.
Evgenii Annenkov: That is clear. Thank you.
Muhammad Urooj Khan: Thank you.
Operator: Thank you. I have a lot of hands raised. Just want to request that attendees, if they do not have any questions, they can please lower their hands. Thank you. In the meanwhile, we have a number of questions from the chat. Let me read them out. The question, just to summarize, they are saying that FCF through the cycle has not been evident. That you have talked about FCF through the cycle, but that has not been evident in recent times. Can you please discuss the challenges you face in areas such as working capital?
Muhammad Urooj Khan: Sorry, can you repeat yourself? I did not get the first part of your question.
Operator: Yeah. The question reads, you talked about FCF through the cycle, but that has not been evident in recent times. Can you please discuss the challenges you face in areas such as working capital?
Muhammad Urooj Khan: On FCF, I would not categorize this as a weak performance because 9 months free cash flow improved approximately SAR 850 million, if I am not mistaken, year-on-year to approximately SAR 222 million. It was around SAR 620 million or SAR 25 million last year. The decline in the net cash maybe reflects capital allocation because of the SAR 950 million in terms of dividend payment and SAR 135 million investment in Pulse rather than any deterioration in the underlying operations. For the working capital, as I mentioned during the presentation, it is only the delivery getting slightly ahead of the billing and collection. This is going to catch up and improve over the upcoming quarters.
Operator: Okay, good. We do not have any further hands raised. Would the management like to make any final concluding remarks?
Soliman Almahmoud: Thank you, Mohammed, and thank you everyone for joining us today. Please, if you have any further questions, feel free to reach out to us. Thank you and have a good weekend.
Operator: Thank you, management. Thank you, attendees. Have a good weekend.
Soliman Almahmoud: Thank you very much.
Muhammad Urooj Khan: Have a good weekend.
