Softcat results: Reseller reports double-digit profit growth as it banks on AI, Microsoft Copilot

The reseller giant has recorded another positive year for profit growth, up 14 per cent

Softcat has reported double-digit growth in gross profit (14.2 per cent) in its latest annual results to £373.8m.

Operating profit was also up 3.5 per cent to £140.9m.

The company has reported a decrease in revenue - down 8.6 per cent to £985.3m - which Softcat CEO, Graham Charlton, explained was due to the revenue figures only accounting for the margin element of software growth.

"So, it gets netted down and it doesn't reflect the gross income that we're billing to customers," he explained.

"Revenue declined purely because we sold much less hardware year-on-year than we did in software.

"Hardware was down year-on-year for two reasons. Because we sold fewer client devices and because we had a major customer buying lots of hardware from us last year and we knew that that would reduce as well.

Charlton explained that the industry's general decline in client devices sales played into it, but he stressed the that only represents a small part of Softcat's business.

On the overall results, Charlton continued: "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 per cent growth in the customer base.

"We continued our investments for future growth, growing headcount by 20.5 per cent to 2,315, by investing across all departments."

Softcat banks on AI and Microsoft Copilot early access

Charlton, who stepped into the CEO role in August after eight years as CFO, touched on the important role AI is playing both in company operations and potential customer offerings.

"We've just spent the last three or four years implementing new finance system and new data storage and governance structures. So within our operations we are perfectly set up to embrace and use some of these AI tools," Charlton said.

"We will also be part of Microsoft Copilot's early access programme, and are using it within our own organisation, which is terrific because we can then work out how to get value out of it from our own operations, which then helps us with then selling it to customers as well, because we're active users of the product."

Charlton explained that for 2024, Softcat is looking to strengthen its AI offering, but also investing in its security and cloud services offering.

"We've moved our security services proposition forward significantly in the last year, we've incorporated the Microsoft Sentinel platform into our manage team and MDR proposition went out of our SOC.

"And we've just obtained our expert MSP status with Microsoft, and with our public cloud services propositions expanding rapidly, we'll continue to invest in that."