Softcat reports 18.3% gross profit growth, completes first acquisition

Softcat PLC reported record financial results for the year ended July 31, 2025, achieving its 20th consecutive year of double-digit gross profit growth with an 18.3% increase to £494.3 million and a 16.9% rise in underlying operating profit to £180.1 million, fueled by a 26.8% surge in gross invoiced income. The company expanded strategically with its first acquisition, Oakland, a data and AI consultancy, and proposed a full-year dividend of 29.3p, up 10.2% YoY, plus a 16.1p special dividend. Looking ahead to FY2026, Softcat forecasts low double-digit gross profit growth and high single-digit underlying operating profit growth, with performance weighted towards the first half.

Analysis

Softcat PLC reported record financial results for the year ended July 31, 2025, marking its 20th consecutive year of double-digit gross profit growth, which increased 18.3% to £494.3 million. Underlying operating profit rose 16.9% to £180.1 million, driven by a 26.8% surge in gross invoiced income to £3.62 billion, primarily from larger solutions projects and very large, low-margin deals. This robust performance underscores the strength of its business model and consistent strategic execution.

The company demonstrated strategic expansion through its first acquisition of Oakland, a data and AI consultancy, broadening its capabilities in a growing market segment. Significant investments were also made in IT infrastructure and digital projects, alongside maintaining strong underlying cash conversion at 95.6% and ending the year with £182.3 million in cash. These actions position Softcat for continued scaling and future growth.

Softcat's commitment to shareholder returns is evident with a recommended full-year ordinary dividend of 29.3p, up 10.2% year-over-year, complemented by a special dividend of 16.1p per share. For FY2026, the company anticipates low double-digit gross profit growth and high single-digit underlying operating profit growth, with performance expected to be first-half weighted due to project timing. This guidance reflects a sustained positive trajectory, albeit with some project-timing nuances.

Key Decisions for Investors

• Investors should consider Softcat's consistent double-digit gross profit growth and strategic expansion into AI/data through the Oakland acquisition as key drivers for long-term value.
• Monitor the company's FY2026 performance, particularly the first-half weighting of underlying operating profit growth, to assess the impact of project timing on quarterly results.
• Evaluate the attractive capital returns, including the 10.2% increase in the ordinary dividend and the special dividend, as indicators of strong cash generation and shareholder commitment.