IT reseller and adviser Softcat (SCT) reported year-on-year growth in revenue, gross profit and operating profit, while cash generation has remained in-line with normal trends during the first quarter to 31 October 2021.

While today’s update was figure-free, the company typically converts about 90% of its earnings before interest, tax, depreciation and amortisation into operating cash flow.

Markets are anticipating rough 11% revenue growth this year to 31 July 2022 of just shy of £1.29 billion and flat adjusted operating profit of approximately £120 million, although Peel Hunt thinks Softcat could beat the latter number.

‘Given that travel and entertainment costs are still not ramping rapidly… we believe operating profit will continue to grow despite guidance.’

STRONG AND BROAD DEMAND

There is no change to strong and broad customer demand, the supply chain is not a big headwind, and hiring/wages are on-plan with technical staff on market rates.

‘The team has continued to perform well during the first quarter and we saw good growth from both mid-market and enterprise corporate customers as well as the public sector,’ said chief executive Graeme Watt.

‘Customer demand has remained high and the hardware supply situation is stable. We’ve a lot still to do in the next nine months but the team is delivering with confidence and is benefitting from being able to spend more time together in our offices.’

Softcat shares have performed strongly through 2021, rallying 36%, as investors recognised the long-run opportunity for the company. However, the stock has come back from all-time highs of £22.40 in September, and nudged 7p down today to £19.15.

Softcat was flagged by Shares at 959.5p in August 2019, which can be read here.

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Issue Date: 23 Nov 2021