- Half-year results beat consensus
- Full-year profit guidance raised
- Shares hit 12-month high
Shares in Softcat (SCT) gained over 12% to a new year-high of £18.22 in morning trading as the software and IT services firm promised investors another year of 10%-plus profit growth.
After posting six-month sales and earnings which topped estimates, the company said operating earnings for the year to July were now expected to be up by low double-digits against high single-digits previously.
DOUBLE-DIGIT GROWTH
Softcat reported a 16.8% rise in revenue to £545.6 million for the six months to 31 January, topping consensus estimates.
The IT supplier said it had found success across technology areas and its customer base, reporting growth of 12.1% in gross profit and 19.3% in gross invoiced income.
The firm also said it was looking forward to making ‘further targeted strategic investment’ to underpin future growth, with headcount up 6% on the previous period.
The board rewarded shareholders with a 4.7% increase in interim dividend to 8.9p compared to 8.5p last year.
RESILIENT BUSINESS MODEL
Martin O’Sullivan, analyst at Shore Capital, was upbeat about the stock saying the interim results and outlook overall reinforced his confidence in the company and its business model.
‘Softcat’s shares have tracked the FTSE All Share over the past three months, balancing optimism about the company’s growth potential with caution over near-term performance amid the UK's ongoing GDP headwinds.
‘The company has not disappointed, delivering a solid performance across gross profit, EBIT (earnings before interest taxation) and EPS (earnings per share) growth, and a slightly raised outlook for EBIT growth outlook for full year 2025 (low double-digit growth from high-single digit).
‘The company continues to capitalise on significant growth opportunities across both the public and commercial sectors, driven by increasing demand for IT infrastructure, cloud solutions, and digital transformation services. Its ability to navigate industry challenges while expanding market share further underscores the resilience and scalability of its business strategy.
‘The need for IT systems to stay current, supported, and secure has become essential, not optional, across cybersecurity, cloud adoption, digital transformation, hybrid data centres, remote working solutions and, increasingly, AI. This strong foundation paves the way for further positive developments and expansion even if GDP growth remains in the doldrums.’
