Saudi technology companies are moving beyond digital transformation, tapping a new wave of spending on artificial intelligence, data centers, and digital infrastructure. The shift boosted the results of listed companies in the first half of 2026. Companies in the Saudi Exchange’s software and services sector generated 12.99 billion riyals ($3.46 billion) in first-half revenue, up 14.7% from a year earlier. Combined net profit rose 4.73% to 2.14 billion riyals ($570 million). The sector comprises seven listed companies. Six have fiscal years ending in December, while Saudi Azm’s fiscal year ends on June 30. Five companies reported first-half net profits: Elm, Solutions, 2P, Al Moammar Information Systems, or MIS, and DBS. Arab Sea Information Systems posted a loss at the end of the period. Solutions led the sector in revenue, generating about 6.24 billion riyals in the first half, up 9% year on year. Net profit rose 2.1% to 824 million riyals. Elm ranked second, with revenue climbing 21.1% to 4.99 billion riyals. Profit exceeded 1.17 billion riyals, up 7.7% from a year earlier. MIS placed third, with revenue jumping 28.2% to 910 million riyals from 709 million. Profit, however, fell 15.85 % to 55.6 million riyals from more than 66.13 million riyals a year earlier. In the second quarter, the sector’s combined net profit fell 4.77 % to 1.058 billion riyals from 1.112 billion riyals a year earlier. Revenue rose 15.98% to 6.77 billion riyals from 5.84 billion. Structural shift continues G.WORLD Chief Executive Mohamed Hamdy Omar told Asharq Al-Awsat that the 14.7% revenue increase underscored the Saudi economy’s continued structural shift toward technology, data and digital services. The results cover six listed companies with standard fiscal years and do not represent the entire Saudi technology market, he said. They nevertheless provide an important gauge of the sector’s direction. The figures also align with the broader market. Saudi Arabia’s communications and information technology sector reached about 199 billion riyals by the end of 2025, recording a compound annual growth rate of 8% over the previous five years, according to reports by the Communications, Space and Technology Commission. Omar identified three main drivers of revenue growth. The first is continued growth in government and corporate spending on digital transformation, including technology infrastructure, managed services, cloud computing, cybersecurity, and the development and operation of digital platforms. Company results clearly reflect that trend. Revenue from solutions’ core communications and information technology services rose 19.6% in the first half, while Elm’s digital business revenue grew 22.31%. The second driver is the widening use of digital services and platforms by government agencies, companies and individuals. This is lifting demand for digital systems and continuous operational services while strengthening recurring revenue models. Saudi Arabia’s digital infrastructure supports that growth. Internet penetration is near universal, data consumption is rising, and the adoption of AI tools and cloud services is accelerating. The third driver — and one set to play a bigger role — is investment in data and AI infrastructure and data centers. The market is gradually moving beyond software and technology purchases toward investment in computing capacity, hosting, data processing and the infrastructure needed to run AI applications. That shift is creating a new layer of demand for local technology companies. Omar said company performance revealed sharply different growth models across the sector. Solutions and Elm remain its largest companies by revenue and profit, providing a strong and stable base. Smaller companies tell a different story. MIS recorded robust first-half revenue growth of 28.2%, but its profit fell 15.85%, highlighting the need to protect margins while expanding. Meanwhile, 2P posted profit growth. Arab Sea returned to profitability in the second quarter but still recorded a modest first-half loss. Omar also pointed to MIS’s award of a data center hosting services contract from Future Artificial Intelligence Company, known as HUMAIN. Including value-added tax, the contract is worth more than 30% of MIS’s total 2025 revenue. Its significance extends beyond MIS, he said. The award shows the scale of demand that AI and data center investments are beginning to generate for local companies capable of building and operating digital infrastructure. That demand could attract more investment, bring new players into the market and encourage existing companies to expand in the coming years. Omar expects the sector’s revenue momentum to continue in the second half of 2026, supported by sustained spending on digital transformation, data centers, AI, cloud computing and managed services. But the real test will be more than winning revenue, he said. Companies must ensure that revenue translates into cash flow and sustainable profit margins. Project cost management, technology talent retention, operating expense controls, working capital and financing costs, and the efficient execution of major contracts will separate companies that merely grow revenue from those that turn that growth into lasting shareholder value, he added. Omar also expects more mergers and acquisitions across the sector. He cited Elm’s full acquisition of Thiqah Business Services in April 2025 for about 3.4 billion riyals as a clear example of the push toward inorganic growth and broader digital capabilities and services. Elm has said it aims for acquisitions to contribute about 20% of its income over the next five years, reinforcing expectations of continued dealmaking in the sector.
