Softcat shattered market expectations this morning by unveiling a double-digit rise in full-year gross sales and gross profit.
The LSE-listed giant’s gross invoiced income (GII) rose 11.3% to £2.852bn in its year to 31 July 2024, with gross profit up 11.7% to £417.8m and operating profit advancing 9.3% to £154.1m.
Here IT Channel Oxygen pulls out five nuggets buried in the reseller hulk’s annual results.
1. Stupendous second-half growth
With Softcat having grown GII by just 4% in its first half, its full year growth of 11.3% will have caught some onlookers cold.
By our calculations, this means its GII must have vaulted by 17.8% to £1.59bn in its second half.
This is despite Softcat grumbling that the weak UK economy had a “dampening effect on customer demand throughout the year”.
Across the full year, software GII rose 17.1% to £1.81bn, with hardware GII shrinking 8% to £569m and services GII up 18.5% to £476m.
Top-line growth was driven almost entirely by enterprise and public sector. Public sector GII vaulted 16% to £1.098bn, while enterprise GII rose 16.5% to £597m. Softcat’s traditional SMB stronghold grew a more muted 4.8% to £1.157bn, meanwhile.
Softcat will be more pleased with the fact that it kept up its near 20-year unbroken run of double-digit gross profit growth, however.
2. Taking on techies
Softcat shows no sign of slowing its pace of hiring, with average headcount advancing 14.3% during the year (and by over 30% over the last two years).
But in a possible contrast to previous years – when the emphasis may have been on drafting in sales staff – Softcat indicated its headcount growth during its fiscal 2024 had a “bias towards our technical and support functions”. This is to aid its goal of grabbing more wallet share with existing customers.
Softcat now has almost too many heads for its London and Birmingham offices. It plans to relocate to improved premises in the UK’s two largest cities in its new financial year.
3. Wallet share wins out over new customers
Softcat claims the year saw it make further progress against its two goals of adding new customers and growing wallet share with existing ones.
It made much swifter headway on the latter dimension in its latest financial year, with gross profit per customer bulking up 9.7%. Similarly, the number of customers generating over £1,000 of gross profit in the year hiked 5.1% from 7,500 to 7,900.
The number of customers it deals with inched up by a more muted 1.8%, meanwhile.
As a side note, Softcat estimated that its share of the UK and Irish markets remains “in the region of 5%”.
4. Copilot for entire company
Echoing similar moves from peers such as Bytes Technology Group and Advania, Softcat said it had implemented Microsoft Copilot licenses for around two-thirds of its staff, including all its salespeople. The roll out to all remaining staff will be completed in the year ahead, it indicated.
The goal is to ensure staff are better able to support customers with projects in the realm of AI, which Softcat flagged up as a key growth area.
“We continue to see customers engage with and adopt Microsoft Copilot as well as the AI enhancements being built into other SaaS solutions,” CEO Graham Charlton said in a statement.
“On top of that, organisations are beginning to move ahead with bespoke and internally developed AI tools and solutions, which in turn creates demand for datacentre evolution and expansion, whether on premise or in the cloud.”
5. Charlton is chuffed
Charlton took the reins last August at a time of decelerating IT market growth. In his first full-year results call last October, Softcat’s annual top-line growth sank from 29% to 2.2% year on year.
In his results statement this morning, Charlton said he was “delighted” at “delivering strong growth ahead of market expectations despite challenging market conditions”.
“These results are testament to the power of our culture and our continued ability to deliver high quality value to customers just when, more than ever, they need our help to navigate the increasing pace of technological change,” he added.
