Solutions by STC released fourth-quarter financials that markedly underperformed analyst projections, with top-line momentum slowing late in the year. Quarterly revenue growth eased to 4.7% year-over-year, down from a 5.9% pace recorded across the first nine months of 2025.
For the full fiscal year, the Saudi ICT services provider fell short of its own revenue growth target. Management had guided to 8-10% growth for 2025 but closed the year with just 5.5% growth, missing the midpoint and lower bound of its target range.
The company’s fourth-quarter results were notably below external forecasts. Revenue, EBIT, and net income in Q4 came in 9%, 27%, and 40% under UBS estimates, respectively. Versus consensus estimates, the shortfalls were 8% for revenue, 26% for EBIT, and 35% for net income.
Profitability metrics also weakened. Gross margin in the quarter slipped by 1.9 percentage points year-over-year to 17.9%. Operating margin and net margin each declined by 1.6 percentage points over the same period, signaling compression across the profit-and-loss line.
Segment performance was mixed. The IT managed and operational services division was the clear growth engine, expanding 10.4% in fiscal year 2025. By contrast, the company’s core ICT services and its digital services units grew much more slowly, rising 3.2% and 2.8% respectively for the year.
Looking ahead, Solutions by STC has not yet issued guidance for fiscal 2026. Management has scheduled an earnings call for February 19, during which it is expected to discuss the company’s outlook and to provide forward guidance to the market.
UBS continues to rate the company as Buy, with a price target of SR306.00. That target implies a potential upside of 35.5% from the current share price of SR225.90.
Context and implications - The results underscore a deceleration in revenue momentum and margin pressure entering the new fiscal year. The stronger performance in IT managed and operational services highlights demand concentration in that area, while subdued growth in core ICT and digital services points to uneven demand across the company’s service mix.
Next steps - Investors and sector observers will be watching the February 19 conference call for clarity on management’s expectations for fiscal 2026 and any actions planned to address the margin deterioration and underperformance versus guidance.