As a pioneer ICT and digital solutions provider within the Kingdom, solutions by stc has experienced remarkable growth over the past 20 years. This notable growth is steered by the Company’s ability to evolve in tandem with changes within the industry. Saudi Vision 2030 has also been a pivotal guide for the Company and enterprises within the Kingdom – companies have commenced digitizing processes in keeping with the goal of transforming the Kingdom into a digital hub. Today, solutions by stc provides its products and services to a growing number of industries and enterprises across the Kingdom.

Our Company strategy complements Vision 2030. Having completed strategic initiatives that provided a solid foundation for growth, we have now arrived at an era of “stable growth with strong profitability”. This vision is being propelled by the LEAP strategy (2020-2025) which will focus on bringing in sound revenue, investing in new business lines, growing inorganically, enhancing customer experience, attracting the best talent, and pushing our boundaries by venturing into business overseas.

solutions by stc achieved a remarkable growth during the year. Our financials are not only capturing the remarkable growth achieved this year, but also reflect our strategy that is focused on catering to the evolving needs of our customers across the Kingdom and beyond.

During the year, the Company had its Initial Public Offering (IPO) – a landmark event that highlighted the progress the Company has made and the growth it is positioned to achieve in the future. The Company’s IPO was 130 times oversubscribed and attracted
SAR 471 billion in orders.

Financial highlights

Net profit SAR 833 million	Net profit for the year amounted to SAR 833 million compared to SAR 702 million of the previous year		18.7%
Gross profit SAR 1,708 million	Gross profit for the year totaled SAR 1,708 million compared to SAR 1,422 million of the previous year		20.1%
EBITDA SAR 1,107 million	Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for 2021 amounted to SAR 1,107 million compared to SAR 862 million the previous year		28.4%
Total assets SAR 7,173 million	Total assets grew to SAR 7,173 million compared to SAR 6,335 million the previous year		13.2%
Shareholders’ equity SAR 2,271 million	Shareholders’ equity grew to SAR 2,271 million compared to SAR 1,924 million of the previous year		18.0%

Income statement

	2021 SAR ‘000	2020 SAR ‘000	2019 SAR ‘000	2018 SAR ‘000	2017 SAR ‘000
Revenue, net	7,815,797	6,891,419	5,257,296	4,041,299	2,962,262
Cost of revenue	(6,107,831)	(5,469,447)	(4,410,052)	(3,076,252)	(2,047,609)
Gross profit	1,707,967	1,421,972	847,245	965,047	914,653
Total operating expenses	(808,863)	(664,965)	(499,216)	(392,723)	(344,613)
Operating profit	899,104	757,007	348,028	572,324	570,039
Other income and expenses	4,921	(3,234)	86,730	35,962	27,427
Zakat	(71,107)	(51,978)	(40,933)	(51,831)	(47,604)
Net profit for the year	832,919	701,796	393,825	556,455	549,862
Gross profit	21.9%	20.6%	16.1%	23.9%	30.9%
Net profit	11%	10%	7%	14%	19%

	2021 SAR ‘000	2020 SAR ‘000	Change SAR ‘000	Percentage (%)
Revenue, net	7,815,797	6,891,419	924,378	13.41
Cost of revenue	(6,107,831)	(5,469,447)	(638,384)	11.67
Gross profit	1,707,967	1,421,972	285,995	20.11
Total operating expense	(808,863)	(664,965)	(143,898)	21.64
Operating profit	899,104	757,007	142,097	18.77
Other income and (expenses)	4,921	(3,234)	8,155	252.18
Zakat	(71,107)	(51,978)	(19,128)	36.80
Net profit for the year	832,919	701,796	131,123	18.68

solutions by stc generates sales through the following:

• Our core business sectors, which include: a) core ICT services (consisting of the System Integrations and Communication and Internet service lines); b) IT Managed and Operational Services (consisting of the Outsourcing and Managed Services line); and c) Digital Services (consisting of the Cloud Services, Cybersecurity Integration and Digital Services lines).
• Our sales channels, which include: a) Business to business (B2B) where sales are conducted either through stc or directly to customers; and b) sell-to-stc where stc is the end customer.

Net revenue grew by 13.4% to SAR 7,816 million in 2021 as opposed to SAR 6,891 million in 2020. This progress was supported by business growth across all key business lines.

• Core ICT services: +13.0% YoY in 2021
• IT Managed and Operational Services: +19.9% YoY in 2021
• Digital Services: +7.4% YoY in 2021

The trend reported above is consistent with the growth patterns reported in previous years with Core ICT services contributing substantially towards the overall growth of revenue. Moreover, the pandemic caused changes in consumer behavior - solutions by stc closely monitored these changes and addressed customer needs through digital transformation measures in various aspects of the business.

This year, our B2B sales channel contributed 71% towards the total revenue while sales made to stc (stc is the end customer) contributed 29% of the total revenue.

B2B sales is an aspect that we have continued to focus on throughout the years – we have gathered customers from a variety of sectors and businesses of different scales. Moreover, we aim to develop this aspect of our business by further growing our presence among SMEs.

Revenue by customer and channel

	2021 SAR millions	2020 SAR millions
stc	2,246	2,424
B2B	5,569	4,467
Total revenue, net	7,815	6,891

As a percentage of revenues, net

Business-to-stc

Sell-to-stc represented 29% of total revenue, net in 2021. A marginal decrease is noted in the contribution from this channel to the overall revenue of the Company. This is in line with solutions’ strategy to focus on growing its B2B portfolio and acquiring customers across the Kingdom.

Business to Market (B2B)

Government and private agencies represented 71% of total revenue, net in 2021. The growing contributions from these sectors are in line with the Company’s strategy to diversify its revenue base and obtain a greater contribution from private agencies while supporting the initiatives of government organizations in line with Vision 2030 and its comprehensive mechanisms for digitization in the Kingdom.

Revenue by major products and services (‘000)

 

Geographic Analysis of Company’s Total Revenue

	KSA	Gulf Cooperation Council (GCC)*	Total
2021	7,814,523,164	1,274,237	7,815,797,402

Assets and liabilities

	2021 SAR ‘000	2020 SAR ‘000	2019 SAR ‘000	2018 SAR ‘000	2017 SAR ‘000
Total current assets	6,446,295	5,571,035	4,523,290	4,261,236	3,432,103
Total non-current assets	726,453	763,592	354,098	188,814	75,911
Total assets	7,172,748	6,334,628	4,877,388	4,450,049	3,508,014
Total current liabilities	4,634,258	4,068,116	3,377,268	2,658,919	2,017,633
Total non-current liabilities	267,922	342,948	243,296	125,754	92,250
Total liabilities	4,902,180	4,411,063	3,620,564	2,784,673	2,109,883
Total equity	2,270,568	1,923,564	1,256,824	1,665,377	1,398,131
Total liabilities and equity	7,172,748	6,334,628	4,877,388	4,450,049	3,508,014

*Revenues of Kuwait – SAR 1,142,784, Revenues of Bahrain – SAR 118,453, Revenues of UAE – SAR 13,000

 

Assets, liabilities, and equity

Total assets increased from SAR 6,335 million in 2020 to SAR 7,173 million during the year. The increase is mainly due to increase in Cash and cash equivalents from SAR 993 million to SAR 1,608 million and Accounts Receivables from SAR 2,804 million to SAR 3,021 million resulting from effective working capital cycle management.

Total liabilities increased to SAR 4,902 million from SAR 4,411 million in 2020. The increase is primarily due to Deferred revenue from SAR 1,705 million to SAR 2,277 million in 2021.

Total equity increase from SAR 1,924 million in 2020 to SAR 2,271 million during the year. This increase is mostly due to profit for the year and compensated by the dividend payment treasury shares.

It was a tremendously successful year for solutions by stc. All elements that contribute towards the financial growth of the Company have developed positively and align with the progress the Company envisions.

 

Abdulrahma Alrubaia
Chief Financial Officer