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Softcat trading update signals growth is on track

Channel player’s brief insights into how its third quarter has fared will provide further reassurance for those channel watchers looking for signs of economic resilience

When the financial results for the first quarter started to come out, most of the action covered late last year or the first few weeks of 2023.

Numbers from Softcat, Computacenter and Bytes all provided comfort to those across the industry hoping the doomsayers had overhyped the negativity around the economic situation.

There were some fears, though, that as the year progressed, that picture could change. Investors also shared those concerns, and Softcat has made sure its backers are kept up to date with a Q3 trading statement that covers the three months ended 30 April.

The brief statement indicated that the firm, which always expects to deliver growth, has been able to navigate the current choppy waters.

“The company performed well during the period, delivering further year-on-year growth in gross invoiced income, gross profit and operating profit,” the update stated.

“The board is pleased with progress and anticipates the outrun for the full year will be in line with its current expectations,” it added.

When Softcat delivered its H1 numbers, the board indicated that given the strong performance in that period, it expected the momentum to continue, and it was advising shareholders that the expectation was that the outrun would be ahead of the initial expectations.

Growth opportunity

The firm has been following a strategy of going after market share and the large growth opportunity it has identified in the UK market.

The firm’s half-year to 31 January delivered a 17.9% increase in gross profit, which the business uses as its primary measure of progress. Revenues decreased by 11.3% to £512.4m, largely as a result of making a comparison with a previous period that had benefited from a large customer deal. 

Speaking at the time the H1 numbers were released back in march, Graham Charlton, chief financial officer at Softcat, shared its belief in future UK growth prospects.

“We know there is a long-term, very appealing, growth opportunity for us organically in the domestic market,” he said. “It’s a great time to be building that team. And gaining and creating new expertise is around new emerging technology, listening to what customers need us to help them with. We’ll get ahead of that curve compared with the competition if we can keep that hiring rate going.”

This month has seen full-year numbers released from Exclusive Networks and Westcon-Comstor, with both distributors enjoying growth and riding a continued wave of customer investment in security, networking and digital transformation.

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