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(Sharecast News) - Technology infrastructure product and service provider Softcat described a year of robust profitability and cash generation in its preliminary results on Tuesday, although its shares were sliding after revenue fell almost 9% and failed to meet market forecasts.
The FTSE 250 company said that despite a dip in revenue, which decreased 8.6% to £985.3m, there was resilience in other key financial indicators.
According to Bloomberg, however, market participants had been expecting revenue of £1.09bn.
Gross invoiced income increased 2.2% to £2.56bn, while gross profit jumped 14.2% to reach £373.8m, and operating profit rose 3.5% to £140.9m.
One of the standout achievements for Softcat was its cash conversion rate, which reached 93.2% for the 12 months that ended 31 July - a substantial improvement from the prior year's 76.2%.
The board announced a progressive ordinary dividend and a special dividend, with the full-year total ordinary dividend standing at 25p - a 4.6% increase from the prior year, while the special dividend remained steady at 12.6p.
Basic earnings per share rose 1.3% to 56.2p.
Throughout the year, Softcat said it maintained unbroken organic growth in gross invoiced income, gross profit, and operating profit, as it achieved double-digit gross profit per customer growth and expanded its customer base.
It noted investments across all business areas, including a significant increase in headcount, which grew by 20.5%.
The company's balance sheet remained robust, with cash and cash equivalents totalling £122.6m - a substantial increase from the previous year's £97.3m.
Looking ahead, Softcat said it anticipated double-digit gross profit growth to persist, as it maintained its expectations for operating profit in 2024, with growth expected to be second-half weighted.
The board said the firm's strong financial performance and strategic investments positioned it well for continued success in the sector.
"I am pleased to report on our 2023 results which represent another record year for Softcat - our unique culture and relentless dedication to delivering the best customer service in the industry continue to serve us well," said chief executive officer Graham Charlton.
"We once again made progress on both selling deeper into existing customers, with double-digit gross profit per customer growth, while also attracting new customers, delivering 1.9% growth in the customer base.
"We continued our investments for future growth, growing headcount by 20.5% to 2,315, by investing across all departments."
Charlton said the company was evolving its customer offering in response to a changing technology landscape, keeping pace with emerging customer needs.
"The rate of change in our industry, with respect to the technology we are selling, the channels through which it is sold and the way it is consumed, is significant.
"However, the customers' need for advice and support in navigating this increasing complexity and the need to deploy the right technology for their circumstances to remain competitive is constant.
"This gives organisations like Softcat an exciting opportunity to take a bigger share of an ever-growing market."
Graham Charlton said the company remained in a solid financial position, adding that it had "great confidence" in its long-term growth and cash generation as it again recommended paying a special dividend.
Reporting by Josh White for Sharecast.com.
