Bytes, Softcat and Westcon-Comstor display business resilience

It has been a tough year economically, but some channel players sharing their results this week have shown that growth is possible

The past few days have seen several channel players share results that underline the strength of the indirect model.

Bytes recently shared interim numbers covering its six months ended 31 August, with revenues improving by 16.3% to come in at £108.7m with a climb of 13.8% in adjusted operating profit to £33.9m. During the period, the firm managed to secure some sizeable public sector deals as well as keep enterprise demand ticking over.

Other highlights included increasing the headcount by just shy of 10%, and keeping a customer base, with renewal rates of 113%.

The firm enrolled in Microsoft’s early-access programme for Copilot, with Bytes using the (artificial intelligence) AI tools internally and getting prepared to help customers once it is fully launched.

Neil Murphy, Bytes CEO, said it delivered the strong results thanks to its skilled staff and strong vendor relationships.

“While the economic backdrop remains mixed, we have continued to see strong demand from our corporate and public sector customers for security, cloud adoption, digital transformation, hybrid datacentres and remote working solutions. This has allowed us to invest in our business, growing our headcount to more than 1,000 for the first time while equipping our people with the skills to advise customers on the latest software, services, and hardware offerings,” he said.

“A shift to AI products will be one of the defining trends in the IT services sector in the coming years, and we are well-placed to capitalise on that opportunity,” he said in reference to its Copilot involvement. “We are also looking forward to working with our other vendor partners that are developing AI software tools.”

“Looking ahead, we have made a good start to the second half of the year and are well-placed for the remainder of the financial year,” he added.

That positive outlook came on the heels of preliminary results for Softcat’s full year ended 31 July, which were shared yon 24 October. Although revenue dipped slightly, down by 8/6% to £985.3m, the gross profit number was up by 14.2% to £373.8m.

The firm continued to add fresh customers, breaking through the 1,000 barrier in the fiscal year, and was able to get those already on board spending more with the channel player, with gross profit per customer increasing.

Graham Charlton, Softcat CEO, pointed out that despite changing technologies and evolving customer needs, the requirement for the channel remained a constant.

“We once again made progress on both selling deeper into existing customers, with double-digit gross profit per customer growth, while also attracting new customers, delivering 1.9% growth in the customer base,” he said.

“We continued our investments for future growth, growing headcount by 20.5% to 2,315 by investing across all departments. We are evolving our customer offering in response to the changing technology landscape, keeping pace with emerging customer needs,” he added.

“The rate of change in our industry, with respect to the technology we are selling, the channels through which it is sold and the way it is consumed, is significant. However, the customers’ need for advice and support in navigating this increasing complexity and the need to deploy the right technology for their circumstances to remain competitive, is constant,” he said.

The display of resilience in the face of a tough year has not been confined to the reseller level. At the start of the week, distributor Westcon-Comstor revealed its first-half (H1) revenues had improved by 14.9% to hit $1.85bn. The firm reported double digit growth for all regions, including EMEA for the six months ended 31 August.

The distie has the advantage of being a strong player in both networking and security, which accounted for 90% of its revenues in H1, both of which are growth areas.

“These results illustrate our ongoing ability to deliver solid, double-digit growth against a challenging macroeconomic backdrop, driven by our digital leadership within technology distribution and unique data-driven approach,” said David Grant, CEO at Westcon-Comstor.

“Looking ahead, our shift to software and services means we are ideally placed to thrive in the subscription-based, everything-as-a-service [XaaS] platform economy of the future. By continuing to innovate and add value at a strategic level, we will enable our channel partners to unlock new opportunities as together we embark on the next wave of our digital transformation,” he added.

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