Reaching a new 40% female target will be “like pushing on an open door”, Softcat’s CEO said as he discussed its expectation-busting first-half results.
Talking to IT Channel Oxygen, Graham Charlton also declared himself “reasonably pleased” with Softcat’s position with VMware following sweeping changes at the virtualisation giant, and weighed in on when client device spending might rebound.
40% “an easy target”
Softcat’s share price advanced by over 5% this morning as it announced operating profits of £66.7m for the six months to 31 January 2024, a 5.8% hike.
The LSE-listed outfit also revealed it has met its goal of 35% female workforce mix ahead of target, and has now hoisted that target to 40% by 2030.
Talking to IT Channel Oxygen, Charlton claimed Softcat’s progress on gender diversity has become “self fulfilling”.
“I was on a call the other day with our Sales Development Programme Managers. Nine people were on the screen in front of me – five were women and four were men,” Charlton said.
“When you start to get that equality of representation at management level – and naturally we are now just pitching up with balanced interview panels – we’ve created a momentum around it.
“[40%] is an easy target, and we’re pushing on an open door in many regards. We were coming from 30%, and we’re trying to get to 40% – so if we do a good job on equality those numbers will just happen to us.”
The split for Softcat’s technical workforce is much lower, Charlton conceded.
“But we now have a few females in key leadership positions within our services and technical organisations who are acting as beacons and role models for women in those areas,” he said, however.
“You need a combination of ambition and patience. You’ve got to do it in the right way and not try to fast track in unnaturally, but build it in a sustainable fashion, which is what we’re doing.”
“Gradual build” for PCs
Softcat saw gross invoiced income (GII) rise 4% to £1.26bn in its first half, despite lower device sales contributing to a 17.6% drop in hardware GII.
With the rise of ‘AI PCs’, Windows 11 and the ageing fleet fuelling talk of a perfect storm for device refresh, when does Charlton believe PC sales will rebound?
“I don’t think it’s an inflexion point, and suddenly we’re in the sunlit uplands. It will be more of a gradual build,” Charlton responded.
Client devices are about 10% of Softcat’s gross income, Charlton said.
“From it being a big negative number on the growth column, we’re now lapping weak comparisons. So I think it will normalise and we’ll hopefully see flat to moderate growth over the balance of this financial year,” he explained.
“I think volumes will then start to pick up meaningfully, sequentially as we edge into the next financial year.
“You see customers move budgets around – so how much of that is then incremental is hard to guess at. But it’s one of the many reasons for us to be increasingly positive as this year progresses.”
“Reasonably pleased” with VMware position
Asked to call out vendors that are performing well for Softcat, Charlton said he is “very excited” about what Lenovo and HP Inc will do around AI-enabled laptops in 2024.
“The likes of Dell and HPE are unfashionable at the moment, because they’re heavily exposed to hardware, and they’re down. But the way I see them developing their portfolio, and the way they’re interacting with us and thinking about the long-term opportunities is really exciting as well,” he added.
“Microsoft continue to do a terrific job and are a really important part of all of our customers’ IT estates. We’ll continue to organise around them.”
Softcat is VMware’s largest UK partner, Charlton said.
Although sweeping changes made by new owner Broadcom is ruffling feathers among smaller partners and customers, Charlton said he is “pleased with Softcat’s position”.
“I think we’ve got pretty good clarity now,” he said.
“Being protected under the partner status was never something that was at risk for us, and the customers we work with are in the space where they’ll continue to be executed by partners, rather than being taken direct.
“So it’s reasonably positive for us. However, lots and lots of our customers have faced significant challenges with how the pricing works, and how they might look at other options.
“I think we’re best placed to support customers through some difficult times and transitions there.”
Softcat’s positioning “really strong”
“Incremental tailwinds” such as GenAI, cyber and data management will play to Softcat’s strengths and enable it to increase marketshare, the Marlow-based company claimed in its H1 results statement.
Has that led it to think differently about where it’s investing in the business?
“Not differently,” Charlton replied.
“But it’s reinforced the confidence we have that continuing to build and invest for the long term through this economic cycle was absolutely the right thing to do.
“Our positioning as we emerge from these challenging times is really strong as a result of that continued investment.
“We’ve got an ability to talk to a customer about their entire IT stack, or just one element of it, and we can go wherever they want to take the conversation, rather than having to force any particularly route down their throat.
“We’ve invested in the breadth of that capability, and that’s what I think is so powerful.”
Doug Woodburn is editor of IT Channel Oxygen
