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Softcat trading update adds to positive channel picture

Channel player issues third-quarter trading update to indicate that momentum built up in the first half is continuing

The past couple of days have seen a raft of listed channel players share results and updates, with the general theme being one of growth.

Adding to the numbers from Bytes, Westcon-Comstor and Logicalis, Softcat has issued a trading update covering its third quarter to 30 April 2022.

Softcat has been a consistent performer, with its first-half numbers issued in March showing good progress. The firm’s fiscal first half showed a revenue increase of 33.6% to £770.9m, with gross profit up by 11.7% at £150.2m. In terms of product segments, hardware revenues improved by 56.1%, software by 8.2% and services by 25.2%.

That momentum has continued, with its latest trading update indicating that aside from dealing with component shortages, the business has kept rolling in the third quarter.

“The company continued to perform well during the period and delivered double-digit year-on-year growth in revenue, gross profit and operating profit. Growth was broad-based across all technology segments, reflecting strong and stable customer demand,” Softcat stated in the update.

The firm also expressed some frustration over supply chain shortages, which have had a widespread impact across the industry, but described the situation as “challenging but consistent with the first half”.

Softcat indicated to shareholders that the fourth quarter and full year should pan out positively: “The board is pleased with the progress and, because of the strong income performance in the period, now expects that operating profit for the full year will be slightly ahead of previous expectations.”

Yesterday, rival channel player Bytes Technology Group shared its full-year numbers covering the 12 months to 28 February 2022, reporting a 13.8% increase in revenues to £447.9m and a 57% rise in operating profits to £42.2m, which it put down to strong customer spending across both private and public sectors.

The strong performances were not limited to the reseller end of the channel, with Westcon-Comstor also reporting numbers for its year to 28 February 2022, showing total net revenue up by 11.8% to $2.89bn. With demand holding up, the distie was able to enjoy decent market share across the key areas of security, networking and hybrid infrastructure.

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) increased by 52% to $68.1m, with gross margins averaging 11% globally. Westcon International’s gross profit increased by 9.6% to $319m, with Asia-Pacific and Europe driving sales.

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