Softcat has beaten profit expectations in a “strong” fiscal first-half performance, as it set a new 40% female employee goal.
The LSE-listed giant saw operating profit hike 5.8% to a record £66.7m in the six months to 31 January 2024, as gross invoiced income (GII) advanced 4% to £1.26bn.
Softcat’s key gross profit metric rose 11% to £196.5m.
CEO Graham Charlton hailed the “strong set of results”, as he claimed that new tailwinds including GenAI mean “the prospects for our industry are stronger than ever”.
Client “revival” on the cards
Softcat’s GII growth was driven mainly by software, whose total pogoed 11.9% to £769.5m.
Services GII bounced 13.3% to £218.4m, while a 17.6% drop in hardware GII to £275.6m – driven by reduced client and low-margin server sales – was “anticipated”.
Softcat began to see “some revival” in the client devices market towards the end of the period, Charlton stressed, however, in line with analyst excitement around ‘AI PCs’.
“There are many ageing assets currently in use across corporate and public sector organisations, and these are likely to be refreshed in the near term. The Gen-AI impetus and Windows update cycles will only add to this pressure as time goes by,” he said.
40% female goal
Charlton characterised AI as one of three “incremental tailwinds” (alongside data management and cybersecurity) that will propel “an already growing market”.
They present a “great opportunity” for Softcat to boost marketshare beyond its current 5%, Charlton said.
That is why Softcat increased headcount by 14.6% – or 314 net employees – during the period, he explained, although he acknowledged that headcount growth will “slow a little” in H2 and FY 2025.
Softcat has met its goal of 35% female workforce mix ahead of target, and has now raised the bar by “pushing towards 40% by 2030”, Charlton said.
Some 63% of its board are female, he added.
AI opportunity
Riffing further on AI, Charlton said Softcat is “already beginning to see the all-encompassing impact the broader AI opportunity will have across both infrastructure and applications”.
“Recent M&A activity by some of our top partners demonstrates how they are thinking about embedding AI innovation within infrastructure itself – this includes by creating more efficient networks and management of compute workloads, for example,” he said.
“We believe our ability to support customers in thinking about how all these requirements overlap and interact will remain a key advantage for many years to come.”
“Clear opportunity”
Softcat’s shares immediately rose on the results, and were up by around 3% at the time of writing.
The expectation-busting profits reflected a “small over delivery” on gross profits and slightly lower costs in the period, Softcat said.
The Marlow-based reseller, which ranked top in the recent Oxygen 250 report, “executed well” on its mission of winning new customers and selling more to existing ones during the period, Charlton said. Customer numbers rose 1.3% to 10,100, while gross profit per customer leapt 9.6% to £38,900.
Softcat is evaluating opportunities to expand its network of overseas offices in both North America and Europe, Charlton said.
“The prospects for our industry are stronger than ever and we have a clear opportunity, across all segments of our customer base, to gain further wallet-share,” Charlton concluded.
