KUALA LUMPUR (June 30): SNS Network Technology Bhd (KL:SNS) reported a 73.6% drop in first-quarter net profit as revenue nearly halved, mainly due to the timing of product deliveries and higher operating costs.

Net profit for the quarter ended April 30, 2026 (1QFY2027) fell to RM2.71 million, or 0.16 sen per share, from RM10.24 million, or 0.61 sen per share, a year earlier. Revenue declined 45.9% to RM445 million from RM822.75 million.

The ICT solutions provider said the corresponding quarter last year benefitted from several substantial commercial orders. Excluding those large contracts, its underlying revenue performance remained relatively stable.

It added that revenue in the latest quarter was affected because certain ICT products were not delivered by suppliers in time for onward delivery to customers, delaying the recognition of sales.

The group said advance payments to suppliers increased during the quarter to secure ICT products amid supply constraints and price fluctuations. At the same time, it also received higher advance payments from customers for the corresponding orders.

"As such, the lower revenue recognised during the current financial quarter was primarily attributable to the timing of inventory deliveries and the recognition of the related sales, rather than a decline in customer demand," it said in its quarterly filing.

Profit before tax also declined due to lower revenue and higher operating costs, particularly increased depreciation charges on property, plant and equipment.

Despite the weaker earnings, SNS saw its gross profit margin improved to 6.6% from 4.3% a year earlier. However, operating expenses rose 19.3% to RM25.69 million from RM21.54 million, offsetting the improvement in margins.

The group did not declare a dividend for the quarter.

Looking ahead, SNS said it continues to expand its nationwide retail footprint through new multi-brand and brand-specific outlets, while strengthening its device-as-a-service (DaaS) offerings to tap growing demand for flexible, subscription-based ICT solutions.

The company also expects artificial intelligence (AI) to become a key growth driver as businesses increasingly adopt AI-powered applications.

To support this strategy, SNS recently launched the SNS AI Factory, which it described as Malaysia's first locally hosted, fully managed AI cloud infrastructure. Located at Telekom Malaysia KVDC, the facility is powered by 64 Nvidia Hopper graphics processing units across eight Dell Technologies PowerEdge XE9680 servers, supported by Nvidia Quantum-2 InfiniBand networking and Nvidia AI Enterprise software.

The AI factory offers GPU-as-a-service (GPUaaS), providing enterprises, government agencies and academic institutions with subscription-based access to AI computing resources. SNS said half of the facility's computing capacity is allocated to commercial workloads, with the balance reserved for AI ecosystem development through training programmes, boot camps and industry hackathons.

The group believes the platform positions it to benefit from rising demand for AI computing and data centre services as organisations accelerate digitalisation and adopt more data-intensive applications.

With the infrastructure now operational, SNS expects to accelerate customer onboarding, expand subscription-based engagements and generate recurring revenue from its AI and cloud computing services.

Shares of SNS closed two sen, or 4%, higher at 52.5 sen on Tuesday, giving the company a market capitalisation of about RM894.6 million. The stock is down 3.7% over the past 12 months.