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Octopus Digital Sees 85% Profit Plunge in Q1 2025 as Operating Costs Surge

  • May 2, 2025
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Octopus Digital Limited (PSX: OCTOPUS), a notable player in Pakistan’s digital automation and industrial analytics sector, has reported a significant downturn in profitability for the first quarter of 2025, ending March 31. According to its unaudited consolidated financial statement, the company posted a sharp 84.85% year-on-year drop in net profit, which fell to Rs18.74 million compared to Rs123.7 million during the same period in 2024. The steep decline in profits is largely attributed to increased administrative and selling expenses, which rose by 34.97% to Rs94.73 million in Q1 2025. Although the company benefited from a considerable jump in other income, which increased more than thirtyfold to Rs21.82 million from Rs0.7 million in Q1 2024, this was not sufficient to offset the overall impact of rising costs on the bottom line. Revenue also saw a notable contraction, falling by 26.25% year-on-year to Rs231.46 million from Rs313.86 million in the same quarter last year. Meanwhile, the cost of revenue rose by 17.62% to Rs128.61 million, further narrowing the company’s gross margin. As a result, gross profit fell significantly by 49.71%, standing at Rs102.85 million compared to Rs204.51 million in Q1 2024. The company’s operating profit also took a hit, dropping by 77.82% year-on-year to Rs29.89 million. This was compounded by a dramatic rise in finance costs, which surged to Rs9.22 million in the current quarter compared to just Rs76,000 in Q1 of the previous year. These higher financial charges contributed to the overall weakening of profitability before tax, which declined to Rs20.67 million—an 84.65% drop compared to Rs134.65 million in the corresponding period last year. Taxation during the quarter was recorded at Rs1.92 million, significantly lower than the Rs10.95 million reported in Q1 2024. After tax, the net profit for the quarter stood at Rs18.74 million. Despite this, the overall profitability picture remains bleak, as the net earnings reflect a severe year-on-year contraction. Shareholders also faced a significant blow in terms of returns. Basic Earnings Per Share (EPS) plummeted to Rs0.13, down from Rs0.84 in Q1 2024, while diluted EPS mirrored this decline, falling to Rs0.13 from Rs0.83. This represents an 84.52% and 84.34% drop, respectively, reflecting the challenging operating environment and financial headwinds facing the company. The first quarter performance signals a tough start to 2025 for Octopus Digital, raising questions about cost control, revenue sustainability, and its ability to maintain margins in an increasingly competitive and cost-intensive landscape. While the significant increase in other income provided a temporary cushion, the rise in operational and finance-related expenses demands strategic recalibration. As a tech-oriented company listed on the Pakistan Stock Exchange, Octopus Digital is closely watched by investors and analysts alike for its role in transforming industrial data into actionable intelligence. The Q1 2025 results underscore the pressures even digital-first businesses face in managing growth while keeping costs under control. With three more quarters to go in the fiscal year, stakeholders will be monitoring whether the company can recover momentum through operational efficiencies, revenue diversification, or cost optimization strategies in the months ahead. 

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