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Softcat shares H1 progress

Channel player indicates the business emerged from a tough 2023 in decent shape, and ambition to grow market share remains paramount

Softcat has shared its half-yearly numbers for the six months ended 31 January, showing reasons for optimism, but some signs that challenging macroeconomic conditions have taken a toll.

The channel player reported an 8.8% decline in revenues to £467.2m, but delivered double-digit growth in gross profit (11%), which is the firm’s primary measure of income. Operating profit growth of 5.8% was also ahead of expectations.

Softcat is known for its organic UK growth and a policy of recruiting to help drive that growth, and H1 was no exception, with headcount increasing by 14.6% during the period.

Graham Charlton, Softcat CEO, said the first-half performance had been a good one, and it had been able to exceed some expectations.

“The breadth, depth and progressive nature of our offering, delivered via our exceptional people and their relentless dedication to customer service, remains a compelling proposition,” he said. “We continue to execute against our key objectives to win new customers and sell more to existing customers.”

The firm is already a couple of months into its second half, and used the H1 update to indicate to investors it was looking to deliver a strong full-year set of numbers, as well as meet its guidance of double-digit gross profit and high single-digit operating profit growth.

Softcat stated there were continuing opportunities in the market, and its long-followed strategy of investing in headcount and delivering full coverage of the UK market would set it up for long-term growth.

Reasons for optimism

Charlton pointed out the numerous reasons for the firm to be optimistic as it moved deeper into 2024.

“The future opportunity in our industry remains incredibly exciting,” he said. “AI [artificial intelligence], data management and cyber security, among other technologies, continue to drive rapid transformation in technology, and this will generate growth across all areas from the cloud and datacentre to the edge.

“These incremental tailwinds to an already-growing market play perfectly into our comprehensive offering at a time when customers need broader and more integrated support from their partners than ever before,” said Charlton. “This is a great opportunity for us to further increase our market share, and we have therefore continued to invest for future growth.”

Charlton thanked the firm’s staff for driving the growth against a difficult economic backdrop. “This progress was only possible because of the fantastic team at Softcat with our special culture and the attitude of our people remaining key elements of our competitive advantage,” he said.

The Softcat H1 numbers come in the wake of recent financial updates from Bytes and Computacenter that also indicate the channel can keep momentum going and come through 2023 delivering growth.

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