Softcat’s CEO mooted potential M&A as it beat expectations for the first-half of its fiscal 2025 – and hoisted its profit guidance for the full year.
The LSE-listed giant this morning unveiled a 19.3% rise in gross invoiced income to £1.51bn for the six months to 31 January 2025.
The bottom line followed suit, with Softcat’s key measures of gross profit and operating profit leaping by 12.1% to £220.2m and 10.4% to £73.7m, respectively.
“We have continued to successfully implement our strategy, resulting in a first half performance slightly above our initial expectations and an upgrade to full year guidance, despite the persistent backdrop of generally more challenging trading conditions,” CEO Graham Charlton stated.
Charlton departed from previous results statements, however, by explicitly mooting potential M&A (Softcat hasn’t made an acquisition in its 32-year history).
“While our growth to date has been entirely organic, the strength of our financial position means that we could also complement the development of our offering through acquisitions, should a compelling opportunity arise,” Charlton said.
Softcat recently established a presence in Germany amid efforts to ramp up its international delivery capability, Charlton added.
Pondering Softcat’s performance
Softcat’s interim results following an upbeat full-year trading statement by software-focused rival Bytes Technology Group. They also follow the publication of peer Computacenter’s full-year 2024 results, which showed a small decrease in both sales and profits.
Charlton said Softcat’s growth was “broad based”, with software GII clambering 22.5% to £942.8m, and hardware and services GII up 18.5% to £326.6m and 8.8% to £237.7m, respectively.
Growth was “especially strong” in security, networking and data centre infrastructure, although workplace growth was impacted by a slower-than-expected recovery in client devices.
Softcat’s headcount rose 6% to 2,617 year on year during the period, with new hires focused on technical roles. With Softcat having just opened larger offices in Birmingham and London – with Bristol soon to follow – full-year net headcount expansion is set to hit 6-8%.
Softcat continued to make good on its strategy of winning new customers and selling more to existing ones. Customer numbers rose 1.4% year on year, while gross profit per customer hiked 10.7%.
Softcat now expects operating profits for the full year to grow low double digits, up from high single digits previously.
“Our performance in the period, coupled with an encouraging second half pipeline, provides us with the confidence to upgrade full year operating profit guidance,” Charlton said.
“Our progress is attributable to the breadth of our offering and sustainability of our growth model, powered by Softcat’s special culture and the differentiated customer service it delivers.”
