Four talking points as Bytes grows by nearly a quarter
Software reseller sees top line vault by 23 per cent in 1H, but what were the key takeaways from its results statement?
Bytes Technology Group has become the second UK reseller giant in as many days to unveil double-digit growth in its latest results period.
The LSE-listed software specialist saw gross invoiced income rise by 23 per cent year on year to hit £786.2m in its fiscal first half ending 31 August 2022 (compared with the 29 per cent full-year growth Softcat unveiled yesterday).
Here we round up the key talking points from its 1H results.
Bytes off to a flyer in its fiscal 2023
Branding its 1H performance a "really good start to the year", Bytes' CEO Neil Murphy said its customers are showing a "continued appetite to invest in their IT requirements despite the macro-economic environment."
Bytes' ultimate top-line (gross invoiced income) vaulted 23 per cent to £786.2m, with software GII up 23 per cent to £738.4m, hardware rising 34 per cent to £20.9m and services up 33 per cent to £13.4m.
That growth was underpinned by its customers' appetite for security, cloud adoption, digital transformation, hybrid datacentres and remote working solutions, Bytes said.
For comparison, that figure is slightly below the 29 per cent full-year GII hike announced by Softcat yesterday (although it should be noted that the latter's results covered a longer and slightly earlier period, and include a much larger hardware component).
Staff numbers rose by 98 to 871 from year end.
"We have already made a good start in this second half, although we remain mindful of the domestic and global macroeconomic pressures," Bytes stated.
Don't be fooled by revenue plunge
Thanks to some tweaks to the way public companies like Bytes are being asked to report their numbers, the reseller saw a massive reduction in its statutory revenue figures in its latest results.
Bytes' revenue number limped in at £93.5m, a 28 per cent increase on the restated figure for its 1H fiscal 2022.
There was already a big delta between Bytes' GII and revenue numbers in its FY 2022 results, but following Bytes decision to "net down" all its software revenues, the former number is now over eight times bigger than the latter.
This purely cosmetic development is no surprise considering that rival Softcat made an identical decision to net down all its software revenues in its latest results (as a result, Softcat's GII, which encompasses more hardware, is now roughly 2.3 times bigger than its revenue number).
Bytes following in Softcat and Computacenter's net zero footsteps
Having announced a Low Carbon Action Plan in May (which covered scope 1 and 2 reductions and scope 3 supply chain engagements), Bytes said it will be partnering with an external environment consultant to help drive this through.
Doing this will also help to ensure that its plans are recognised by the Science Based Targets initiative (SBTi), something that rival Softcat has already achieved and that Computacenter is working towards.
Gross margins matter for Bytes
Increasing gross profits - which Bytes sees as its go-to margin measure - is a "key priority" for the reseller going forward, it said.
Bytes maintained its gross profit percentage at 8.3 per cent during the period.
Breaking this down, the GP% among is corporate clients was flat at 14 per cent, while the equivalent figure in the lower-margin public sector (which generates nearly two-thirds of Bytes' top line) saw a "small but significant" increase to five per cent.
"This is notable considering the level of competition within tenders and the growing trend towards aggregated bids where several public sector bodies may require pricing to be submitted on a combined basis, often with many millions of GII at stake," it said.
The trick now is to boost gross margins by focusing on selling a wider range of solutions and higher-margin security products and maximising vendor incentives by boosting its technical certifications, Bytes said.