Softcat shares drop 11% despite reporting "another record year"

(Alliance News) - Softcat PLC on Tuesday said it delivered "another record year" as it reported a single-digit rise in annual profit but a fall in revenue as its Hardware segment struggled.

Shares fell 11% to 1,245.51 pence in London on Tuesday morning.

The IT infrastructure and services provider reported a pretax profit of GBP141.9 million for the year ended July 31, up 4.2% from GBP136.1 million the year prior.

Revenue dropped 8.6% to GBP985.3 million from GBP1.08 billion. The decline was primarily driven by its Hardware segment, which saw revenue drop 24% year-on-year to GBP610.6 million. Meanwhile, revenue for its Software and Services segments grew 26% and 43%, respectively.

"I am pleased to report on our [financial 2023] results which represent another record year for Softcat...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," commented Chief Executive Graham Charlton.

"The company remains in a very strong financial position, and we have great confidence in our long-term growth and cash generation. In recognition of this, we are again recommending the payment of a special dividend."

Softcat maintained its special dividend at 12.6p on Tuesday and also declared a final dividend of 17.0p, up from 16.6p the year prior. This brought the total payout for the year to 25.0p, compared to 23.9p a year before.

Looking forward, Softcat expects its double-digit gross profit growth to continue, with its operating profit expected to be second-half weighted and in line with current market expectations.

According to Softcat-compiled analyst consensus, expectations for financial 2024 operating profit range between GBP147.6 million to GBP158.4 million. In financial 2023, operating profit totalled GBP140.9 million.

By Heather Rydings, Alliance News senior economics reporter

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