Market growth strategy delivers for Softcat

Softcat has come through a half-year of trading against the backdrop of the coronavirus pandemic in strong form. The firm’s numbers for the six months ended 31 January show revenues increasing by 10% to £577m, gross profits improving by 20% to £134.5m and operating profits up by 41% at £57.1m.

Graeme Watt, CEO of Softcat, said the numbers were encouraging, particularly as it was comparing a time dominated by the pandemic against a normal year.

He said the firm had been following a strategy of growing market share and had also been successful on that front in H1. “We’ve had a strong first-half performance, growth has been good, it’s been highly profitable,” he said. “And I think we’ve gained share or taken share in a standard decent market.

“I think we’re in a resilient market and gaining share is a key part of our strategy, which is to grow our presence with existing customers and take on new customers as well, so we’re pleased to take on new customers as well and grow our customer base to 9,600.”

Watt said the business had continued to invest during the period and was well placed to keep the growth coming in its second half.

“We said coming into the pandemic that unless there was a very strong reason not to, that we continue to invest during the pandemic, so there’s appetite to invest, and the results that we’ve produced in the six months are very much under an umbrella of continued investments,” he said. “We’ve grown our headcount by 177 in the last 12 months, which is a growth of 12%, and that investment continues to be for the mid-term and the long term.”

Looking ahead, Watt said the tech market would play a key role as the world returned back to a more normal situation.

“I’m very optimistic,” he added. “I think technology as an industry will continue to grow, and we’ve got very low share in our industry. As long as we’ve got lots of opportunities to grow within the industry, there are lots of positive signs. It’s not so clear at what kind of pace things will grow in the next six to 12 months, but I’m sure they will.”

There has been an influx of private equity into the channel over the first few months of this year, but Watt said Softcat’s position continues to make it a tough competitor for rivals.

“We’ve already built organically some really significant scale in the UK, 9,600 customers and over 200 vendors with capabilities across workspace, networking and security, datacentre, cloud,” he said. “There’s not very many people that can do that and if you take that breadth of partner, that breadth of technology and predictive capability, and our culture, that’s very difficult to replicate. So I’m more focused on what we’re doing in the market and our opportunities.”