Sam Mudd talks Bytes’ H1: Devices, security and the long-term view on AI

Having delivered strong GII and profitability, Bytes’ revenue dip was attributed to an industry-wide slowdown in device sales

Bytes Technology Group today announces strong half-year results for the six months ending 31 August 2024, with the company delivering a 16.3 per cent rise in operating profit to £35.6m.

The group capitalised on sustained demand in software, security, cloud, and AI services, driving gross invoiced income (GII) up 13.7 per cent to £1.23bn.

“We continue to focus on growing our share with customers by serving them well and ensuring we retain our staff,” CEO Sam Mudd says, speaking to CRN.

“We’ve made strategic investments in personnel, internal systems, and new vendor accreditations to support our customers in agile, yet secure, IT environments.”

The half year did deliver a slight decline in revenue by 2.9 per cent to £105.5m – which Bytes attributed to muted hardware sales.

According to Mudd , the dip in the hardware market is likely due to customers taking a ‘wait and see’ approach to big hardware purchases, as they assess the impact of the new Labour government, as well as the potential of AI PCs.

“We’ve seen a slowdown in hardware sales, partly due to the new government and businesses waiting to see what happens with the budget,” Mudd says.

“I think there’s some pent-up demand. People do need to refresh their infrastructure, and at some point, they’ll have to replace their desktops. It’s just a matter of when.

“We’re not just selling hardware for hardware’s sake.

“It’s about being strategic with our customers, understanding their needs around datacentre refreshes or migrations, and then working with vendors like Dell and HP to deliver the right solutions.

“We’ve seen a quieter year in 2024, but I believe hardware demand will return.”

Vendor partnerships and security focus

Beyond the Microsoft relationship, which has driven a significant amount of business for the Top VAR, with 130,000 licenses sold across its client base to date, generating annualised GII of circa £39m.

Much like other comparable businesses, Bytes is focused on the long-term relationship building and the tailored support it offers clients around their Copilot builds, rather than the assistant itself as a key revenue stream.

“The real value for us isn’t just in selling the licenses—it’s about engaging with customers to show how AI can deliver efficiencies in their business,” Mudd says.

“We workshop with them, help them understand how AI can automate mundane tasks, and then move into broader discussions around security and operational enablement.”

Bytes’ focus on vendor partnerships extends beyond Microsoft, as the business is focused on building out strong propositions in the security space, singling out vendors including Palo Alto, HP, Nutanix, Checkpoint, Sophos, Cato Networks, Bitdefender, Adobe and Druva.

People and culture

During the period, Bytes increased headcount by seven per cent to 1,130 employees and expanded its physical footprint with new offices in Sunderland and Portsmouth.

“We’ve invested in our offices and refurbished spaces like our Leatherhead site. It’s about making the staff feel the business is moving forward,” Mudd says.

“Retention and staff satisfaction are critical. We want Bytes to be a place where people enjoy working and see clear career progression. We’ve spent a lot of time ensuring we’re offering great career paths and creating a great working environment.”

Looking ahead to the remainder of FY25, Mudd stresses three key priorities: “First, it’s about our staff—making sure we look after them, listen to them, and support their growth.

“Second, ensuring our customers receive the best service, from sales engagement to technical delivery and post-support.

“Finally, we’re focused on securing new clients and building stronger vendor partnerships to stay aligned with what our customers need.”