A record year and a maiden US acquisition weren't enough to stop investors taking profits.
Softcat (LSE: SCT) shares fell 6% on Wednesday even as the IT reseller posted another year of double-digit growth and unveiled plans to push into the US market. Gross invoiced income climbed 30.5% to £4.72bn in the year to 31 July, gross profit rose 24.7%, and underlying operating profit jumped 19.4% to £215.1m, with growth spread across its technology areas, customer groups and a particularly strong corporate division.
The fall came despite results that beat expectations, suggesting the market had already priced in a strong showing. Investors instead focused on more cautious guidance for the year ahead, with Softcat flagging high single-digit growth in underlying operating profit excluding its newly announced US acquisition, a marked slowdown from the pace just reported.
Softcat has become one of the London market's go-to AI beneficiaries, profiting from businesses pouring money into the infrastructure, storage, networking and security needed to support artificial intelligence workloads. Analysts noted the company sits in an enviable spot, benefiting from the AI boom without carrying the execution risk of building the underlying technology itself, even as memory chip shortages added complications to pricing and product availability during the year.
The group continued to reward shareholders handsomely, returning £137.5m through dividends and a £45m share buyback, alongside a 7.5% increase in the total dividend, underlining strong cash generation even as demand patterns shifted. Management said customers remained disciplined with spending but continued to invest through the year, a sign of resilient underlying demand despite macro uncertainty.
Attention now turns to the acquisition of US-based IT solutions provider GDT, announced after the year-end, which marks Softcat's first serious push into the American market and should help it follow international customers across borders. The deal's integration, alongside the toned-down profit outlook and jittery sentiment around AI valuations globally, will be the key swing factors for the shares in the coming months.
This report is based on Softcat’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Jakub Żerdzicki on Unsplash.
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