AI demand benefits Softcat

Strong demand for artificial intelligence (AI-)enabled infrastructure and attempts by customers to get ahead of storage price rises helped lift Softcat’s third quarter.

The channel player issued a trading update covering the three months ended 30 April, with the firm indicating it had a decent quarter. The statement indicated that there had been double-digit year-on-year (YoY) growth in gross profit and operating profits, and it had seen a solid performance across the business.

The wide spread of revenue sources was helped by the increased demand for infrastructure that could support AI deployments and the continued pull forward of some hardware orders to minimise the impact of memory shortages.

As a result, the board revised its expectations upwards, now expecting mid-teens growth in underlying operating profit for the full year, up from the high single digits it had previously signalled could be coming.

Graham Charlton, CEO of Softcat, said the business had been able to tap into strong areas of demand, particularly around AI, to deliver the third-quarter performance, adding: “We have continued to see strong customer demand, with the impact of AI on technology driving investment and innovation across all elements of IT infrastructure.

“Our uniquely broad offering brings together specialisms from the datacentre to the edge, through the network, security, data and automation layers, and across hardware, software and services, spanning the design, implementation, management, support and optimisation of new solutions. This puts us in a strong position to help customers as technology platforms become more complicated and integrated in an age of significant change,” he added.

Charlton added that as well as being able to offer a wide portfolio of products and services the firm also benefited from a diverse customer base. “With more than 10,000 customers, our experience from the mid-market all the way through to large and complex customers in highly specialised industries, gives us an unrivalled depth of expertise to draw on just when CIOs and IT managers need that help and insight most,” he said.

AI-fuelled growth had also been a theme in Softcat’s first-half numbers, with the business reporting strong stakes in that area for the six months to 31 January.

Speaking back in March, Charlton said the demand for AI-enabled infrastructure was a feature of the market that had been a positive feature throughout its fiscal year so far: “AI is a very hungry technology. It needs compute power, huge amounts of data, storage, low latency, massive networks and strong devices. It takes security challenges and defence mechanisms to the next level.

“While our customers are at different stages of working out how they use AI in their applications, it’s already and will continue to build demands on the infrastructure, and AI is only as good as the data you feed it and the expert use applied to it,” he said.

Softcat has also been a strong advocate of using AI internally – it was an early adopter of Copilot and has been increasingly exploring where the technology can enhance its own operations and increase efficiencies.