Softcat CEO: The strategy is delivering

Another fiscal year ends with investors being rewarded for backing the channel player

Softcat has delivered a solid set of numbers and given a bullish outlook on the firm’s position in the market.

The channel player saw revenues for the year ending 31 July break through the $1bn barrier, coming in at £1.08bn, compared to £784m in the same period last year. Operating profits improved by 14%, coming in at £136.1m.

Graeme Watt, CEO of Softcat, said the numbers showed that the company’s strategy was continuing to deliver.

"We’re pleased,” he said. “I think we’ve achieved what we set out to achieve and more in the year, and it’s been another year of strong organic growth, profitability and cash generation.

“Our core mission is to be the best place to work to deliver outstanding customer service and grow faster than the market. In a fairly straightforward strategy, I think we’ve executed well against that strategy. You can see that with our gross profit per customer being up by 16.1%, which is pleasing. We declared a dividend and we drove our new customers up by 2.1% in the period as well, and that now marks 68 quarters of consecutive growth of income and profit.”

There are fears that macroeconomic issues could undermine momentum in the channel, but Watt said the business was in a good position.

“We came out of the year with strong momentum,” he said. “Price rises have been a feature of the market and we’ve been passing them on to our customers, who have absorbed them. Demand is good.

“We’ve got a strong balance sheet, no debt, so we’re well positioned to manage any challenges, or better positioned to manage any challenges, than probably most of our competitors. I would argue, if competition starts to get a bit more cautious about hiring staff, getting in front of customers, spending money, giving credit, I think those are areas of opportunity for us, as we would continue to be strong in all those areas.”

Watt added: “I see opportunity and I see strength and I see momentum coming out of last year. But I think we also know that if it came to it, we know how to manage risk, particularly customer risk, and we know how to manage our costs too.”

Softcat has continued to invest in people during the fiscal year, with headcount up by 14.3%, and Watt said it had a sizeable recruitment team and would continue to use people as a way of growing the business.

The firm also has a strategy of focusing on organic growth and that is not set to change, although the business has hired a corporate development manager to make sure that if a compelling opportunity did emerge, it was in a position to assess it and potentially make a move.

“We have always said that if the right thing comes, if a compelling proposition came along, then we’ve looked at it very seriously, but I think you also know that everything we’ve done historically has been organic, so that’s likely to continue,” said Watt.

At last week’s Canaltys Channel Forum, channel attendees expressed optimism about the future, and Watt echoed that.

“I am feeling really good about the channel,” he said. “I’m feeling really good about our industry. It’s a great industry continually offering new opportunities to grow. Technology doesn’t stand still.

“We love our place in the channel as a value-added reseller. We’ve got some great people, we’ve got some great vendor relationships, we’ve got some fabulous customers. We are just full of optimism and the channel remains in rude health.”

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