This article first appeared on GuruFocus .
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Gross Profit Growth:Increased by 22.6% to GBP269.9 million.
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Underlying Operating Profit:Rose by 27.3% to GBP93.8 million.
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Cash Balance:Ended the period with GBP206 million in cash.
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Gross Invoice Income:Grew by 33.3% to just over GBP2 billion.
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Hardware Revenue Growth:Increased by 78.7%.
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Software Revenue Growth:Increased by 18.6%.
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Services Revenue Growth:Increased by 6.9%.
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Underlying Cash Conversion:Achieved 147.6%.
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Interim Dividend:Approved at 9.9p per share, up 11.2% year-on-year.
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Share Buyback Program:Announced GBP45 million program, completed GBP22.4 million.
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Underlying Basic EPS Growth:Increased by 25.8% year-on-year.
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Customer Base Growth:Increased by 3.5% to over 10,400 customers.
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Gross Profit Per Customer:Grew by 19% to GBP52,200.
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Release Date: March 18, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Softcat PLC ( STU:SF5 ) reported a strong growth in gross profit by 22.6%, driven by a 3.5% increase in customer base and a 19% growth in average gross profit per customer.
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The company achieved a significant increase in underlying operating profit by 27.3% year-on-year, reflecting effective execution and strategic investments.
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Softcat PLC ( STU:SF5 ) maintained a robust balance sheet with a cash balance of GBP206 million and a strong cash conversion rate of 147.6%.
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The company announced a GBP45 million share buyback program and an interim dividend payment of 9.9p per share, demonstrating a commitment to returning excess capital to shareholders.
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AI is positively impacting Softcat PLC ( STU:SF5 )'s business, enhancing both customer demand for AI-capable infrastructure and internal operations through new AI functionalities and automation.
Negative Points
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The company faces uncertainty due to ongoing memory shortages, which could impact future quarters and lead times.
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Softcat PLC ( STU:SF5 ) anticipates a tougher comparison in the second half of FY26 due to large solutions projects completed in the previous year.
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The effective tax rate increased by 60 basis points due to nondeductible expenses, affecting profit after tax growth.
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There is a potential risk from evolving macroeconomic and geopolitical situations that could impact business performance.
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The company incurred GBP8.5 million of non-underlying costs related to system implementation and acquisition expenses, impacting statutory operating profit.
Q & A Highlights
Q: Can you unpack the drivers of Softcat's underlying outperformance in the first half, excluding the impact of larger deals and memory pricing pull forward? A: Kathryn Mecklenburgh, CFO, explained that approximately 40% of the operating profit growth was due to RAM shortages and large deals, while 60% came from the base business. Gross profit growth was 15-20% due to RAM and large deals, with the remainder from the base business, indicating strong performance, particularly in the corporate sector.
Q: How is the second half of the year expected to perform, and how has Q3 trended so far? A: Kathryn Mecklenburgh noted that the second half is expected to be challenging due to a large deal in the previous year and ongoing RAM shortages. While Q3 has shown continued momentum, uncertainties remain for Q4, particularly regarding macroeconomic and geopolitical factors.
Q: Can you provide insights into the impact of AI on Softcat's business and whether it is disrupting traditional vendors? A: Graham Charlton, CEO, stated that AI demand is primarily felt in infrastructure, including software, hardware, and services. While AI may disrupt some traditional vendors, it presents a significant opportunity for Softcat to support customers with evolving infrastructure needs. The company is well-positioned to capitalize on these changes.
Q: How are vendor partnerships, particularly with Microsoft, evolving in light of recent changes like price rises and new product launches? A: Graham Charlton highlighted that Microsofts changes, including price rises and new product launches, are part of their strategy to invest in future offerings. Softcat sees this as an opportunity to strengthen partnerships and adapt operations to align with vendor strategies, enhancing competitive advantage.
Q: How is Softcat managing the rollout of the new sales system, and are there any impacts on pipeline visibility? A: Graham Charlton confirmed that the rollout of the new sales system is progressing well, with positive feedback from users. There are no expected issues with pipeline visibility, and the project is on track.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
