‘We’re very optimistic, not just about next year, but well beyond’ - Softcat CEO on full-year results

Graham Charlton talks datacentre opportunity, future acquisitions, and US expansion

UK-based VAR Softcat has grown across all major markets this year despite a macro slowdown, CEO Graham Charlton tells CRN.

The company, which reported a double-digit gross profit increase for FY25, has seen progress across all three major customer segments; mid-market, enterprise, and public sector.

“The breadth of our offering is one of the reasons we’ve had such a good year,” says the CEO.

Security and datacentres were the two main areas driving profit this financial year, notes Charlton.

The firm has also been on an upward trend in sectors such as networking, devices, and the refresh cycle, which reportedly picked up momentum as the year went on.

“Even though the macro environment has been slower, and despite the Microsoft changes and other factors that impacted some resellers, we’re able to engage with a wide range of customers on different challenges,” the CEO adds.

Acquisitions and organic evolution

The business made its first acquisition ever with the £8m buyout of Leeds-based data and AI consultancy Oakland in April.

Its short-term financial impact is minimal, but its long-term strategic value is significant, says the leader.

“In terms of profit, that business is tiny compared to our core operations.

“But strategically, the capabilities it adds and the halo effect it will bring to our offering are significant.

“As we invest and expand delivery capacity, it will become an important strategic asset.”

Looking ahead, the CEO believes that Softcat will have enough organic strength to pursue another purchase.

“While we can meet all our growth targets without making further acquisitions, we do see opportunities to keep expanding, whether by adding technological capabilities or extending our geographic reach.

“If we found the right opportunity, we would act, but only if it were truly compelling.

“For now, organic growth remains the main priority, though acquisitions could accelerate capability or geographic expansion.”

Organically, Charlton sees security as an area that will remain strong and profitable for Softcat.

He also expects to see growth from AI driven datacentres, as well as from the networking segment which has so far been steady, but also from the device refresh cycle which might have more momentum left in it.

“IT infrastructure keeps expanding and evolving, creating enormous opportunities for strong players with the right offering who don’t rest on their laurels.

“We’ll continue targeting long term organic double digit income growth. We’re very optimistic, not just about next year, but well beyond.”

Softcat’s FY25 results were strongly supported by large solutions projects, mostly in datacentres, and occasionally in devices, Charlton tells CRN.

“There are also very large Microsoft deals, usually in the public sector, but those are low margin.

“While hard to forecast, there’s certainly a chance we could win more next year.”

Territorial expansion and workforce changes

Geographically, the company has invested in relocating and upgrading its facilities over the past couple of years.

Smaller and newer offices, such as the ones in Newcastle, also have strong potential, Charlton highlights.

Beyond the UK, Softcat is currently “being pulled” into mainland Europe and the US by its customers, the US being the most exciting opportunity, according to Charlton.

“We already do a lot of work for UK customers in the US and have 20 people on the ground there.

“As we approach critical mass, we’ll start targeting local customers directly.

“Acquisitions in the US are an option, but only if we find the right ambitious team that would thrive as part of Softcat.

“Given the size of the US market, cultural similarities, time zone overlap, and customer base, it’s the most logical next step.”

While the organisation is also involved in the Middle East and Asia through UK customers, it remains cautious not to overextend.

“We’re spoiled for choice with opportunities, so we need to pace expansion appropriately,” says the VAR’s leader.

“The Middle East is an area of interest, but more for the future rather than the near term.”

To support its growth ambitions, Charlton intends to maintain a similar recruitment rate again next year.

The leadership structure will also continue to evolve, with local leadership becoming increasingly important, he tells CRN.

“We now have ten offices, including in the US.

“As they grow, leadership structures at the local level are becoming critical, and we’ve been putting effort into strengthening them.”