Softcat share price drops despite buoyant full-year results

Reseller giant sees turnover top £1bn as demand softens from corporate customers

Softcat has seen its share price dip as much as 10 per cent this morning despite posting positive results for its FY20.

The reseller giant reported revenue growth of 8.6 per cent to over £1bn, while gross profit grew 12 per cent year-on-year to £235.7m and operating profit grew nearly 11 per cent to £93.7m for the year ending 31 July 2020.

Chief exec Graeme Watt admitted that it did see a "softening" in demand from corporate customers, while public sector businesses performed well.

"Following a very strong first half of the year, we were able to seamlessly transition to 100 per cent home working when the need arose and, despite impact on demand from corporate customers during the last four months of our financial year, we continued to deliver growth in both our third and fourth quarters," he stated in the trading update.

"We also made continued progress with both new and existing customers and are pleased to report that our customer base grew by three per cent and gross profit per customer was up eight per cent on a full-year basis.

"The robust nature of our growth and the strength of our bank debt-free balance sheet means we are well-positioned to seize the long-term opportunities within our market. We were able to deliver these results without the need for redundancies, and our plans for 2021 are to continue to invest in skills and talent to meet our growth ambitions and further enhance our market share."

The Marlow-based reseller anticipates that corporate customers will continue to be "circumspect" about their IT spending over the coming months, resulting in continuing challenges in the market, but it remains optimistic that its ability to grow its market share.

Services revenue saw the biggest jump in year-on-year growth, rising 36 per cent to £115.3m, while software sales grew nine per cent to £519.5m and hardware sales rose over three per cent to £442.3m.

Meanwhile, headcount rose 15 per cent in the year and the reseller intends to continue its investment in expanding its workforce.

"We will continue to focus on growth and taking market share and won't be thrown off course. Our strategy is clear, our business model simple and our purpose is unchanged," Watts stated.