Softcat shares drop 11% despite reporting ‘another record year’

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 £141.9 million for the year ended July 31, up 4.2% from £136.1 million the year prior.

Revenue dropped 8.6% to £985.3 million from £1.08 billion. The decline was primarily driven by its Hardware segment, which saw revenue drop 24% year-on-year to £610.6 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 £147.6 million to £158.4 million. In financial 2023, operating profit totalled £140.9 million.

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