Softcat ahead of expectations after solid first half

Softcat has delivered a decent set of first-half numbers and is expecting to continue building momentum through the rest of its fiscal year.

The channel player has shared numbers for the six months to 31 January, with growth of 12.1% in gross profit, a 19.3% rise in gross invoiced income to £1.5bn, and a 10.4% increase in operating profit to £73.7m.

The firm also increased headcount by 6% during the period as it continues to invest in future growth opportunities.

With profits for the half year coming in slightly ahead of expectations, the firm indicated that it now expects operating profit growth to be in the low double-digits, up from the high single-digits previously announced.

Softcat CEO Graham Charlton said that although market conditions remain challenging, there are pockets of growth and optimism is rising about the prospects for the rest of the fiscal year.

“Really pleased with first-half performance – slightly ahead of expectations coming into the year, good confidence heading into the second half. Market conditions not really changed – still seeing a lot of caution, still seeing some really strong pockets of demand as well. So market conditions have been pretty static over the last 18 to 24 months, but double-digit growth from us,” he said.

“I think [that] reflects the fact we have a really broad customer base, a really rich and diverse offering, so no matter what customers are doing, we’re able to help them with some form of that, to be able to play the long game, keep investing through all the cycles as well,” he added.

Charlton said the business has a clear strategy and is well-positioned to take advantage of growth areas.

“[We have a] very clear three- to five-year plan and strategy to improve the business year after year over that period. That involves, for example, now making sure that we’re building new capabilities that are relevant for the age of AI [artificial intelligence], so data services, data engineering, as well as continuing to expand all of the other offerings that we built over time, so security services, public cloud architecture, implementation, design, and all of that kind of thing,” he said.

Charlton said there had been clear pockets of growth in products and services around security, datacentre and networking.

“All parts of our offering and all segments of our customer base have shown strong growth in the period – slightly up on expectations, slightly raised guidance for the full year as a result of that,” he added.

He said the business was ahead of expectations for the first half and expected the rest of the fiscal year to pan out positively, claiming it still had plenty of market share to go after in the UK and there were growth areas that it could support with its skills and services offerings.

“We’ve built some good pipeline into the second half too. We are feeling confident that we’re winning in the market, that we’ve got good opportunities, a terrific customer base, a terrific offering. So, we’re confident about the second half,” he said.