Softcat H2 2026 Earnings Results & Report

Softcat EPS Results

• Actual EPS: GBX 75.80
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Softcat Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Softcat (LON:SCT) operates as a value-added IT reseller and IT infrastructure solutions provider in the United Kingdom. The company advices, procures, designs, implements, and manages technology, such as software licensing, workplace technology, networking, security, and cloud and datacenter for businesses and public sector organizations. It also offers public cloud, collaboration, connectivity, data centre and private cloud, devices, and financial solution services. In addition, the company provides IT asset management, lifecycle solutions, modern management, security, software licensing, supply chain operation, and virtual desktop and application. Softcat plc was incorporated in 1987 and is headquartered in Marlow, the United Kingdom.

Softcat H2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Softcat reported an exceptional FY 2026, with gross profit up 24.7% to £616.3 million and underlying operating profit up 19.4% to £215.1 million. Customer growth accelerated to more than 10,500, while gross profit per customer increased 20.6%.
• Negative Sentiment: Underlying operating costs rose 27.7%, faster than gross profit, reducing the operating-profit-to-gross-profit ratio to 34.9% from 36.4%. Profitability was also affected by lower-margin product mix, Microsoft licensing changes, large lower-margin projects and one-off employee, advisory and incentive costs.
• Neutral Sentiment: For FY 2027, management expects high-single-digit underlying operating profit growth excluding GDT, with gross profit growth modestly moderated by tougher comparisons, the absence of unusually large projects and prior-year memory-related order pull-forward. Non-underlying costs are expected to rise roughly two to two-and-a-half times because of GDT acquisition and integration expenses.
• Positive Sentiment: Management sees substantial long-term demand from AI-driven infrastructure investment, including data centers, networking, security, cloud and services. The GDT acquisition is expected to add U.S. and Americas fulfillment, infrastructure expertise and global cross-selling opportunities, although estimated post-deal leverage will initially rise to 1.3x net debt to EBITDA.

Presentation

[Graham Charlton, CEO at Softcat]

Okay. Good morning, everyone, and welcome to Softcat’s FY 2026 results presentation. I am Graham Charlton, Softcat’s CEO, and I am really pleased to be taking you through an exceptional set of annual results today, joined as always by our CFO, Katy Mecklenburgh, who you will hear from shortly. As you will recall, a little under a month ago, we announced the acquisition of GDT. The response to that transaction from our customers, from vendors and employees has been very positive indeed, and the acquisition will add significantly to our offering, create new capabilities and growth pathways for our business.

[Graham Charlton, CEO at Softcat]

Today, our focus will mainly be on the progress that we have made in the U.K. and Ireland business over the past year, but I will touch on what GDT brings to the opportunity that we have looking forward towards the end of the presentation. We will happily take questions across all of that at the end as well. Before I hand to Katy, I will do the usual recap of who we are and how the business is evolving. This year, we have again extended our position as the U.K. and Ireland’s leading provider of IT infrastructure solutions. We have delivered a year of exceptional growth across an increasingly broad and differentiated customer offering.

[Graham Charlton, CEO at Softcat]

This slide shows that we operate across the entirety of the modern infrastructure stack with the broadest offering and the largest and most diverse customer base in the U.K. Increasingly, we are being asked by customers to support their international operations. We serve more than 10,500 recurring customers across both the private and public sectors. It is the combination of those trusted relationships and the breadth of our offering, combined as well with the outstanding customer service ethos that we have always had. Those are the things that drive the sustainable growth that we continue to see.

[Graham Charlton, CEO at Softcat]

After Katy’s financial review, I will explain how I think we are uniquely positioned for the relentlessly expanding opportunity in front of us and how that acquisition of GDT materially augments the existing strengths that we have. Aside from the acquisition of GDT, during the year, we have continued as well to invest more than ever before in our own business, to our technology, our people, and our workplaces. At year-end, we have over 3,000 Softcaters now based across 12 offices in the U.K., Ireland, and internationally. We have strengthened all teams across the business again this year, added new capabilities, more capacity, and equipped our people with the very best enterprise applications and tools.

[Graham Charlton, CEO at Softcat]

As a result, we have begun and will continue to deploy innovative AI functionality to transform, over the coming years, both our operations and our customer proposition. We are not just seeking to extend the competitive advantage that we have with these investments. We are looking to define what world-leading value-added customer service looks like in our industry today. I will come back to all of that in more detail later. First, I will pass you across to Katy, who will take you through the details behind the exceptionally strong year we have just closed.

[Katy Mecklenburgh, CFO at Softcat]

Thank you, Graham, and good morning, everyone. I am very pleased to share Softcat's results for FY 2026, reflecting another year of successful execution and strong, profitable growth, alongside significant reinvestment to drive our future performance. In summary, we have delivered another very strong year of growth, which was ahead of our expectations at the start of the year. This growth is supported by the previous investments that we have made in our offering, our people and capabilities, and systems and office network, which have enabled further market share gains and improved our internal operations.

[Katy Mecklenburgh, CFO at Softcat]

Gross profit, our key measure of income, grew by 24.7%, primarily driven by the strength of our underlying business performance, supported by the contribution from larger solutions projects and the pull forward of some orders due to memory shortages. Underlying operating profit growth increased by 19.4% to GBP 215.1 million, reflecting the strong growth in gross profit, partially offset by a significant increase in underlying operating costs, which includes both ongoing and one-off investments that we made in the year to support future growth. Underlying cash conversion of 93.6% for the year is towards the top end of our target range, and we ended the year with GBP 199.9 million of cash, having returned GBP 45 million to shareholders through our first ever share buyback during the year.

[Katy Mecklenburgh, CFO at Softcat]

The Board has proposed a final dividend of GBP 0.216 per share, taking the total ordinary dividend for the year to GBP 0.315. This is an increase of 7.5% in line with our progressive policy, and underlying basic earnings per share increased by 19.7% to GBP 0. 832. Turning to the summary income statement, and starting at the top. Gross invoiced income grew by 30.5% to GBP 4.7 billion. Hardware GII increased by 41.6%, supported by strong data center and networking sales, including the contribution from larger solutions projects and pull forward of some customer orders due to memory shortages.

[Katy Mecklenburgh, CFO at Softcat]

Services grew by 30.1%, driven by a growing share of partner-supported business, while Software increased by 25.3% with strength in cybersecurity, licensing, and Microsoft CSP. Revenue grew by 35.4%, ahead of GII, largely due to Hardware, which represents a higher share of revenue as it is reported on a gross basis under IFRS 15. Software revenue growth of 22.6% was slightly behind GII growth, primarily reflecting a mix shift into lower margin products. Services revenue growth of 21.1% was also behind GII growth, reflecting a higher share of externally provided services, which are reported on a net basis. Gross profit grew by 24.7% to GBP 616.3 million, reflecting broad-based strength across our technology portfolio and customer segments.

[Katy Mecklenburgh, CFO at Softcat]

Gross profit growth was particularly strong across our corporate business, with both enterprise and small and medium customers delivering strong double digit growth, and public sector grew by high single digits. By technology area, growth was driven by data center infrastructure, networking, security, and client devices, while Hardware, Software, and Services all grew double digit. Overall gross profit as a percentage of GII declined by 60 basis points year-on-year, reflecting a mix shift into lower margin products, the impact of the Microsoft EA changes, and the diluted impact of large solutions projects at lower margin.

[Katy Mecklenburgh, CFO at Softcat]

The higher than planned gross profit growth and more moderate employee growth drove gross profit per employee to increase by 12.5% to almost GBP 211,000. Moving on to the next slide. Underlying operating costs increased by 27.7%, ahead of gross profit growth as we reinvested strongly back into the business. Commissions grew in line with commissionable gross profit, while wages and salaries increased by 16%. Average headcount growth grew by 10.8%, including Oakland, reflecting continued investment across technical, specialist sales support, and back office roles. We also continued to invest in our internal IT capabilities, systems, data and digital, and office refurbishments, which will support our future organic growth, while we also built out our corporate development capability.

[Katy Mecklenburgh, CFO at Softcat]

Cost growth included the annualized impact of higher Employer's National Insurance contributions, and thanks to our outstanding performance, we were also able to award all of our employees with a one-off share award. This recognizes the role our people play in delivering our consistent outperformance and gives them a way to share in Softcat's future success. Other one-off costs included advisory costs relating to the GDT acquisition and outperform element of other variable pay. Underlying operating profit grew by 19.4% to GBP 215.1 million. As operating costs grew ahead of gross profit, the underlying operating profit to gross profit ratio reduced to 34.9% from 36.4% last year.

[Katy Mecklenburgh, CFO at Softcat]

During the year, we incurred GBP 18.7 million of non-underlying costs. These comprised of GBP 15.6 million of development costs relating to the implementation of our new cloud-based sales and HR systems, which could not be capitalized. These systems projects were delivered in line with budget and are an important part of the foundational platform supporting Softcat's data, digital, and AI transformation. The balance of GBP 3.1 million related to Oakland acquisition related contingent consideration and amortization of acquired intangibles. After deducting these non-underlying costs, statutory operating profit was GBP 196.4 million, an increase of 13.6% year-on-year.

[Katy Mecklenburgh, CFO at Softcat]

Looking forward to FY 2027, non-underlying costs will increase by a factor of around two to two and a half times, with lower costs relating to system developments, but including GDT acquisition and integration costs. Net interest income increased to GBP 6.4 million from GBP 5.3 million last year, reflecting higher interest income earned on cash and cash equivalents despite lower average interest rates. Finally, the effective tax rate increased to 25.8% from 25.4%, primarily reflecting the disallowable deferred consideration relating to Oakland and a small impact from other non-deductible expenses. Profit after tax increased by 13.0% to GBP 150.3 million.

[Katy Mecklenburgh, CFO at Softcat]

Now turning to our customer base and portfolio offering. These charts illustrate the balance and breadth that underpin our performance across customers, products, and technology areas. Our customer mix remains well diversified across corporate and public sector organizations, ranging from smaller businesses through to larger enterprise customers. This breadth reduces reliance on any individual segment and gives us multiple routes to growth. We also retain a balanced mix of Software, Hardware, and Services, supported by a technology proposition spanning public cloud and data center, networking and security, and the hybrid workplace.

[Katy Mecklenburgh, CFO at Softcat]

Together, this diversification and breadth of capability strengthen our resilience, deepen our relevance to customers, support further sustainable growth, and will be further enhanced by the GDT acquisition. Moving slides and on to our customer metrics. The chart on the left shows the continued growth in our total customer base and average gross profit per customer, demonstrating our ability to acquire new customers and to deepen our existing relationships. During the year, our customer base grew by 3.4% over 10,500, with net new customers added across all segments, led by small and medium.

[Katy Mecklenburgh, CFO at Softcat]

This is an acceleration over our last five-year average growth, demonstrating the greater support customers need as the IT landscape becomes ever more complex. Gross profit per customer increased by 20.6% to GBP 58,500, reflecting further progress in selling more to existing customers across our technology portfolio. The chart on the right focuses on customers with whom we have a more established trading relationship, measured as those generating at least GBP 1,000 of gross profit in the year. These customers tend to buy across more technology areas and a broader range of vendors. The number of customers in this cohort grew by 7.1%, again above the five-year average, while gross profit per customer increased by 16.5% to GBP 70,000.

[Katy Mecklenburgh, CFO at Softcat]

The longer tail of transactional customers remains an important source of future growth, while customers generating at least GBP 1,000 of gross profit account for approximately 99% of the group's gross profit. Now turning to cash. Underlying cash conversion was 93.6% towards the upper end of our target range of 85%-95%, reflecting continued good working capital management. Cash generated from operations before tax and after capital expenditure was GBP 101.4 million. Depreciation and amortization increased slightly year-on-year following our recent investments in offices and internal technology, while CapEx more than halved, primarily reflecting lower spend on new office fit outs compared with the prior year. Cash tax was GBP 50.5 million, broadly reflecting the growth in taxable profit.

[Katy Mecklenburgh, CFO at Softcat]

During the year, we returned GBP 137.5 million of cash to shareholders, comprising of GBP 92.5 million in dividends and GBP 45 million through the share buyback program completed in February this year. We ended the year with cash balances of just under GBP 200 million, an increase of GBP 17.6 million year-on-year, after funding the aforementioned shareholder returns and our continued investment in the business. Overall cash generation remains strong and provides a solid foundation as we continue to invest for growth, both organically and through the acquisition of GDT. The next slide covers the ordinary dividend. The Board has proposed a final ordinary dividend of GBP 0.216 per share based on the number of shares outstanding following our equity placing for the acquisition of GDT.

[Katy Mecklenburgh, CFO at Softcat]

Combined with the GBP 0.999 per share that we paid at the interim stage, this results in a total ordinary dividend for the year of GBP 0.315, which is up 7.5% on last year and in line with our policy of paying out between 40% and 50% of profit after tax on an annual basis. In the second half of the year, we established a new revolving credit facility of GBP 50 million, which remained undrawn. After the year end and as part of the GDT transaction, we have negotiated an extension of the RCF to GBP 450 million, together with a term loan of GBP 100 million. As well as supporting the acquisition of GDT, the RCF reflects a maturation of our liquidity management approach, providing the group with the flexibility to maintain our operating cash flow through a combination of cash on hand and available facilities.

[Katy Mecklenburgh, CFO at Softcat]

The cash flow is currently GBP 90 million and unchanged from last year, but will be reviewed after the GDT acquisition closes to take into consideration the requirement of the enlarged group. Now turning to capital allocation. We have a disciplined approach to capital allocation. Our top priority remains unchanged and is to invest in future organic growth, which supports our ambition to take further market share and enables us to continue to scale the business, delivering long-term shareholder value. Our second priority is to maintain a progressive ordinary dividend policy, and any remaining excess capital is then either allocated to compelling inorganic investments or returned to shareholders. Moving forward outside of temporary requirements to support material strategic investments, the group will target a net debt to EBITDA ratio of 0.5x-1x.

[Katy Mecklenburgh, CFO at Softcat]

Following completion of the GDT acquisition, estimated net debt leverage is forecast to be 1.3x, and expected to be below 1x by July 2028. Finally, moving to the outlook. Excluding the contribution from GDT, the Board expects to deliver high single-digit underlying operating profit growth in FY 2027, slightly ahead of gross profit growth, following very strong two-year growth across FY 2025 and FY 2026 of nearly 50%. In terms of phasing, we expect GP to be first half-weighted given the strong second half performance in FY 2026, with underlying operating profit more balanced across the year, reflecting one-off costs in the second half of the prior year. With that, I'll now hand over to Graham to run through the strategic update.

[Graham Charlton, CEO at Softcat]

Thank you, Katy. I will talk about two main things now in this section. Firstly, the growth and investment that Softcat has achieved and made during the past year, and we'll look at what's been driving the performance. We'll also look at how we've been investing for the future in that time as well. We'll start by looking at why I think we performed so strongly this year. Firstly, our core strategy clearly continues to work well. Our focus on outstanding customer service and the breadth and quality of our offering differentiates Softcat in the market and deepens trust with both our customers and vendors. By sustaining investment across market and economic cycles, we've continued to compound double-digit growth, and we've expanded and modernized our capabilities relentlessly.

[Graham Charlton, CEO at Softcat]

Execution has remained strong as well, which comes from our special culture. The energy, alignment, and commitment of our people from the top to the bottom of the organization has been exceptional again over the past few years. Our market conditions have also been good for those with the right skills and offering. Procurement scrutiny remains high, very high as prices have escalated, but customers have continued to invest in their technology. In these conditions, we've been able to use the quality of our proposition to add new customers at an accelerating rate and grow GP per customer, as you saw in Katy's slides.

[Graham Charlton, CEO at Softcat]

Then we have the supply constraints around the memory chips, which have been a net stimulus in the period. As the year has gone on, that situation has become more stable with price rises still happening, but in a more controlled way. Supply of memory chips is highly likely to remain constrained across all of 2027 calendar year, and probably well beyond that too. Whilst this isn't a great situation for customers, it is something that we are particularly well-placed to help them with due to the breadth and depth of our offering and vendor relationships. Finally, AI is benefiting our business in two very clear ways. Firstly, it's beginning to transform how we operate and go to market.

[Graham Charlton, CEO at Softcat]

The modern foundations of data and systems that we've implemented over the past five or six years have created an actionable platform for our own AI innovation. A little more on which later. In addition, AI is also building demand across all five of our technology towers. I'll spend a few minutes now illustrating that point and how I think it will be a driving force in our industry for many years to come. Turning the page, I'll start with a slide we've used before to show how the modern technology stack can be considered to exist in two distinct layers. Firstly, the applications where AI innovation is starting to accelerate, and secondly, the infrastructure required to run those applications securely and at scale.

[Graham Charlton, CEO at Softcat]

Now, we don't do too much in the application layer, although some of our largest vendors cross into that space with their product range, most notably Microsoft. But the infrastructure layer, the Software, the Hardware, and the Services in that infrastructure layer, that's where we mainly work, helping our customers design, procure, deploy, and manage their operating environments. As the application layer becomes more demanding, more data hungry, the infrastructure required underneath to run it must respond. I'll illustrate now this in a little more detail with the next slide, which gives a flavor of what I mean.

[Graham Charlton, CEO at Softcat]

While this is a busy slide, it really only shows the merest tip of the iceberg in terms of the scale and complexity of what's beginning to happen here. We start with the applications at the top. AI functionality requires huge amounts of data, well-organized data to run effectively. That data has to be moved around networks and processed in the right way at the right time, and that data has to be secured through all of those movements and stages. It has to be accessed in different ways by different devices, and it must be contained and updated and tagged within contemporary storage architecture.

[Graham Charlton, CEO at Softcat]

AI is also creating new demands, such as the provision of and management on consumption of the language models for bespoke applications and FinOps optimization of inference consumption. As I say, this is just to shine a light on the very tip of a very simplified iceberg. The challenges that our customers face to evolve their infrastructure and functionality of that are significant, and the solutions to all of that will be a work in progress for years and years to come. In this environment, our role as a trusted advisor with broad capability has never been more valuable. We have deep customer intimacy. We understand their business and their legacy architecture. We have access to the latest products and developments of hundreds of the leading vendors.

[Graham Charlton, CEO at Softcat]

We have top-tier accreditations with those vendors, and we co-invest with them in the skills and services needed to design and deliver the new technologies. We augment the capability of both customers and vendors with the skills that they need to do all of this. In summary, the more complex and rapid that pace of change becomes, the stronger I think our proposition is as well. I'll try and show now where I think the market will provide a very sustainable source of growth for us as well. In fact, this isn't one investment cycle. I'll argue as well that it's not really a cycle at all. This slide shows the three distinct but overlapping elements of what is generally being referred to as AI investment.

[Graham Charlton, CEO at Softcat]

Firstly, there are the huge build-outs being done by the hyperscalers, and we're seeing massive infrastructure spending there, and the current forecasts suggest it will continue to grow. At some stage, the pace of that investment may moderate, and there may be volatility along the way. At Softcat, we've got very little exposure to that hyperscaler investment. We do, of course, resell the products of that investment, such as Copilot, Microsoft Foundry, Azure, OpenAI, Fabric, Amazon Bedrock, and many others. But we are not selling any Hardware into the hyperscalers. We are dealing with some of the neoclouds, and that's an interesting market for us, but we're selective with who we target in that space, and during the past year, we got less than 2% of our gross profit from that space.

[Graham Charlton, CEO at Softcat]

Our core market is the corporate and public sectors, from the small to the large and complex. All of those organizations are at the very beginning of their investment in AI-capable infrastructure. This isn't just my view. It reflects what we hear every day from our customers and our vendors, and it's supported too by the forecasts of both IDC and Gartner. IDC reckon that edge computing spend will grow at an annual rate of 15% over the next three years, and I think Gartner have it at 14%. At Softcat, I think it's clear that we have the skills and the momentum, and we are in one of the most attractive parts of the market.

[Graham Charlton, CEO at Softcat]

The GDT acquisition augments this position by bringing complementary skills and services right at the heart of the data center and networking core of modern infrastructure. How do we plan to seize upon this massive opportunity ahead of us? This next slide showcases the familiar flywheel that's driven Softcat's growth over many years. Our culture drives exceptional customer service. That service builds trust and loyalty, and the resulting performance allows us to reinvest in our people and the proposition. Over time, this cycle's created two enduring advantages. Firstly, market-leading customer engagement.

[Graham Charlton, CEO at Softcat]

Secondly, the breadth and quality of the offering that we have. Performance over recent years, and certainly as you've seen in FY 2026, shows that that model continues to work. Yet our share of a large and growing market remains relatively modest. Despite being the largest in the U.K. and Ireland, at only around 5% or maybe 6%. This leaves enormous scope for us to grow, to win new customers, and to deepen existing relationships and sustain growth over decades to come. This next slide is a reminder of the strategy that we have to build around the same four engines of growth that have been driving us over the past few years.

[Graham Charlton, CEO at Softcat]

This structure remains unchanged, but as well as with our organic investments, the GDT acquisition and the Oakland acquisition a few years ago, has accelerated our progress across a number of these areas. I will walk through each of these four engines in turn now and list the progress that we have made organically. Then I will come back to GDT at the end and explain how that fits within this and creates some exciting new synergies and opportunities for us. So we will start with sales and customer excellence. This pyramid illustrates one of the core strengths of our model, which is how our account managers build and nurture their customer relationships over many years.

[Graham Charlton, CEO at Softcat]

As that trust develops, we can address more and more of their needs and gain a greater share of wallet. During FY 2026, we continued to strengthen this approach across every segment, from the SMB and mid-market customers in the corporate and public sectors through to large, more complex enterprise organizations. Our modernized systems, data, and analytics are helping us to allocate accounts and resources much more effectively, while new tools such as CatNav are enabling our people. Sorry, I have lost a page. Have you got, from slide 21. Thank you. Allowing our people to access our capabilities, vendor relationships, and pricing structures with greater speed and relevance.

[Graham Charlton, CEO at Softcat]

Alongside this, we continue to build our multinational capability, even before the addition of GDT, and develop more tailored go-to-market approaches in selected verticals, including financial services and insurance. These investments are supporting growth at every level of this pyramid, and our total customer base, as Katy has already mentioned, which remember, includes only those customers who have traded with us in two consecutive years. That customer base increased by 3.4%, and gross profit per customer was up by 21%, almost. The number of customers who are generating more than GBP 1,000 of gross profit increased by 7.1%, and GP per customer in that group was up by 16.5%.

[Graham Charlton, CEO at Softcat]

On the right-hand side of this slide, you can see that the number of transactions generating more than GBP 500,000 rose by 17% in FY 2026. So at every level, the strength of our relationship with the customer base continues to improve, delivering good outcomes for those customers and sustained growth and more future potential for Softcat. We will move on now to the broadest offering. On this slide, you can see the interplay between the five technology towers within our proposition. Then, the vendors we work with across those areas, and the service disciplines which span all of that as well. During the year, we have seen broad-based growth again across the whole portfolio, and we continue to invest in new skills and services within each of the towers, working closely with the vendors to bring their innovations to market into practical outcomes for customers.

[Graham Charlton, CEO at Softcat]

The acquisition of Oakland has worked brilliantly for us over the past 18 months alongside this organic evolution and helped articulate, accelerate our capabilities in data, automation, and in AI. The integration of Oakland's progressing very well and to plan and is enabling us to engage at an earlier point with customers as they assess their data and the organization and governance of that data to set the foundations required for AI adoption at scale. We'll turn on now to operational excellence. As you know, we've invested significantly in the systems, the data, and the processes needed to support our next stage of growth. Those foundations are pretty much in place now, and we're moving from platform enablement into optimization with new analytics, new automations beginning to improve the speed, quality, and scalability of how we operate.

[Graham Charlton, CEO at Softcat]

We're bringing together cleaner internal data with external insight on customers, markets, and products. Microsoft Copilot is providing an increasingly important access layer across all of these applications, while the proprietary tools that we're creating within all of that allow us to innovate processes further. CatNav and our cross-sell analytics are among the first examples of this. They're helping people, our people, navigate the offering, access our vendor relationships and pricing structures, and identify relevant opportunities faster. We've continued as well to enhance our customer portal, eCAT, through direct integrations to internal and vendor systems, providing an improved internal user and customer experience.

[Graham Charlton, CEO at Softcat]

During FY 2026, we also completed the rollout of our new HR platform. Our new sales system as well is also now live for an initial group of users and ahead of a wider phased rollout. Together, both of those new systems will enable greater automation, better experiences, and more scalable processes across the group. We are at an early stage, but the direction is really clear. The combination of third-party AI functionality, proprietary tools, stronger end-to-end process ownership, all of that is beginning to transform our operating model, creating meaningful opportunities for us to improve productivity, execution, and most importantly, customer service. Finally, we'll consider our special culture.

[Graham Charlton, CEO at Softcat]

The essential elements of this culture are shown here and remain the foundation of all of our success. As the business grows, we've continued to evolve how we preserve that culture, giving our people a genuine voice, trusting and empowering them, and keeping leadership accessible, recognizing great attitude and results, and maintaining the straightforward and informal environment that makes Softcat distinctive. During the year, we invested in and developed local leadership teams in each of our offices, giving them greater support and autonomy to shape the employee experience that we're developing in each location, and maintaining our transparency of communication, recognition, and continuous feedback.

[Graham Charlton, CEO at Softcat]

As a result, our employee net promoter score increased to 56 from 55 last year, and our employee engagement score was up from 88% to 91%. We also ranked fourth in the U.K.'s best workplaces for 2026 in the super large category, and we retained our Great Place to Work certification in the U.K. and in Ireland and the U.S. as well. We've continued to invest in workplaces that bring our people and our customers and vendors and other partners together. Alongside the relocations that we've done for Manchester and Dublin and the interim refresh of the Marlow headquarters, we've also refurbed in Newcastle, South Coast, and the Leeds offices during the year. We are now bringing together the insight from our employee surveys and the external benchmarks that we have access to shape the employee experience, priorities, and agenda for FY 2027.

[Graham Charlton, CEO at Softcat]

Before I finish with a summary, I'll come back to GDT and the acquisition there and explain why we are so excited about the combination of the 2 businesses. At its heart, we think this is a very complementary combination. Softcat will be stronger as a result. GDT will be a better business too, and together we will be able to offer customers something that neither business could provide in isolation.

[Graham Charlton, CEO at Softcat]

For Softcat, our customers in the U.K. and Ireland gain access to GDT's fulfillment capability across the U.S. and the wider Americas. GDT also brings deep expertise in infrastructure and networking, right at the heart of the market opportunity that I talked about earlier. Their complementary skills and services and strong relationships make us a more valuable partner from day one for both customers and vendors. In fact, since we've announced the deal, I've been on four or five customer calls, and GDT has been a material factor in three of those conversations, the latest of which actually was last night with a U.S. procurement team from a global communications business.

[Graham Charlton, CEO at Softcat]

I can tell you for a fact that as a direct result of the acquisition, we've already won new business with our U.K. and Ireland customers. For GDT, the opportunity's just as clear. They gain access to our broader portfolio and our experience of having built that organically over time in what I think is the most comprehensive solutions business in our industry. GDT's made excellent progress already on this track over the past four years, but I believe that we are the best possible owner now to accelerate that journey with our experience and know-how. Additionally, U.S. customers will benefit from our fulfillment capabilities across U.K., Ireland, Europe, and Asia-Pacific, and together we will be one of only a handful of providers able to support large and complex customers with truly global needs.

[Graham Charlton, CEO at Softcat]

Most importantly, all of this is founded upon a strong alignment of ethos between the two businesses, a shared people-first culture, and an absolute focus on customer service. We'll summarize now. FY 2026 was an exceptional year, as we've said, for Softcat. We delivered strong growth across the business. We added new customers at a greater rate. We've deepened our existing relationships and continued to take market share. Just as importantly, we've kept investing in our people, the proposition that we have, our systems, and our international capability. The business exits this year stronger and with more momentum and opportunity ahead of it than ever before.

[Graham Charlton, CEO at Softcat]

AI is expanding the infrastructure opportunity significantly. It's also giving us new tools and techniques to take our offering to market more efficiently and effectively. The four growth engines of our strategy have been enhanced as well, both organically and through acquisition. As I say, we enter this new financial year with great momentum, a proven strategy, and real confidence in the long-term prospects for the enlarged group. I will finish by thanking everyone at Softcat for the energy that they have brought, again, the commitment and brilliance that they have shown.

[Graham Charlton, CEO at Softcat]

They are what makes Softcat a truly special business, and they have delivered a fantastic year of performance. It is what they will do next and in the future that excites me most. That gets us to the end of the prepared remarks. Thanks again for your time, and we will now move to take questions from the room, and then we will look at what we have coming in online and answer those as well. Thank you.

[Damindu Jayaweera, Analyst at Peel Hunt]

Hi there. Damindu Jayaweera from Peel Hunt. I got three questions, but I will only ask one. I will come back to the others later on. The first question is actually, if I look at consensus forecast from beginning of the calendar year, adjusted operating profit expectation was around GBP 190 million. Obviously, you have come at GBP 215 million. But if I use that GBP 190 million as my base and looking at the very low end of the guidance you are giving for the following year, the effective gross or adjusted operating profit growth rate is actually 20%+.

[Damindu Jayaweera, Analyst at Peel Hunt]

So you are essentially adjusting out, or it feels to me that you are adjusting out the large projects and the memory pull forward that you experienced mostly in the first half. What I want to understand is if you kind of dig into the details in the Q4 numbers or H2 numbers, what is the trend you see there? Because if I just look at the GII numbers, Software GII is up 30%+, services up 30%+, Hardware is only 25%, because I guess the large project is in the second half. Is there anything in the second half that suggests to you things have slowed down or not?

[Graham Charlton, CEO at Softcat]

No, there is nothing in the second half that suggests things have slowed down. We have seen customer behavior be consistent, which is, as we talked about, they are very careful with what they are spending money on and where they are investing, but they are investing. I think that their need to continue investing in infrastructure will remain as well. So what we have here is an unchanged market dynamic, customer demand. Our skills continue to build, and I think are absolutely well-positioned, but we are just trying to create sensible guidance for the year ahead as well.

[Carla Courthial, Analyst at Bank of America]

Hi, I am Carla Courthial from Bank of America. I just wanted maybe to touch on the 2027 guidance on gross profits. You are guiding to a small moderation. How much of that is due to just tougher comps from 2026? What other factors are you seeing for this moderation? Just maybe a second question on underlying demand. You have kind of touched a bit on that already, but 2026 growth was broad across technology areas and customer groups. Going into 2027, are you seeing some areas where maybe you expect some normalization or, on the contrary, some areas accelerating?

[Katy Mecklenburgh, CFO at Softcat]

Got that. I think the first part of the question goes to where Damindu was. It is not to do with overarching business momentum. In FY 2026, we have had these couple of sort of extraordinarily large deals, which we do not have sort of a comp for in the pipeline moving forward. H1 benefited from some pull forward because of RAM. We think that was neutral in H2, but overarching, brilliant business performance as well. Just overarching, a tougher comp. We do not, as to say, as Graham has just outlined, the base business is performing really well.

[Balajee Tirupati, Analyst at Citi]

Thank you. Balajee Tirupati from Citi. Could you share color on implication of Microsoft's latest updates on their partner incentive program, and how is that factored within your 2027 outlook? The second question on something that you mentioned in the release this morning, where you have, while mentioning a conducive demand environment for IT infrastructure, you have also cited a higher degree of scrutiny on discretionary projects. Question would be, did you see that scrutiny increase in recent months? How is prioritization of spend towards IT infrastructure visible in demand that is not directly linked to AI and AI adoption? Thank you.

[Graham Charlton, CEO at Softcat]

Okay. Thank you. The Microsoft changes. Microsoft fee structures are complex, as befits their breadth and diversity of their product range. The changes they have made this time are a continuation of the evolution in their schemes that they have been making over the past few years. They were expected. They are factored into our forward guidance, and we see them as a slight net positive for our business in the year ahead. They are moving an opportunity to earn towards solutions providers with capability to drive adoption of their technology, and that is exactly what we have and have been building over many years now. Our performance with Microsoft and our momentum with Microsoft is terrific. Yeah, factored into our forward guidance as a slight net positive. The continued demand and higher scrutiny.

[Graham Charlton, CEO at Softcat]

Scrutiny on infrastructure investment has been building for years now, and it has been building because the investment that organizations need to make there is significant and relentless. Making sure that they are putting the money in the right places to drive a return is something our customers have been increasingly focused on for the last two or three years. It increased again, I would say, that scrutiny 12 months ago when we got the price changes.

[Graham Charlton, CEO at Softcat]

We are now in a new normal, as I mentioned, around those price changes, where I think we are particularly well-positioned to help them architect the right solutions, be innovative around how to do that, manage the affordability of the solutions that they are putting in place. It gives us a particularly rich vein to show the strengths that Softcat has. I think that scrutiny is here to stay because I think the level of investment that they need to make is here to stay as well, which is why we are continuing our investment in the skills to support that. I think our positioning is very strong to do so.

[Charlie Brennan, Analyst at Jefferies]

Yeah. Hi, it is Charlie here from Jefferies. Just a few questions from me, actually. Firstly, when we look at the components of growth, most of the growth obviously comes from your existing customers. It implies NRR of 120% or something. So you are growing with existing customers well ahead of their IT budget growth. Can you give us some color into where you are gaining share with those customers? Is it displacing other resellers? Is it taking spend that customers were doing internally themselves? Can you just give us some color on that?

[Charlie Brennan, Analyst at Jefferies]

Secondly, you called out some one-off costs that you have incurred during 2026. Can you give us some quantification around the magnitude of those one-off costs and how we should think about that going into 2027? I will just sneak a very quick one in and broaden the conversation beyond Microsoft. I think you call out in the statement a helpful benefit from vendor rebates. Was there anything unusual that happened in 2026 that we need to think about for 2027? Thank you.

[Graham Charlton, CEO at Softcat]

Okay. Shall I tackle growth with existing customers, then I will pass to Katy for costs.

[Katy Mecklenburgh, CFO at Softcat]

Yep.

[Graham Charlton, CEO at Softcat]

The growth that we are seeing from existing customers is particularly strong. We accelerated actually the growth in the new customer base as well, which was really pleasing to see in the year. I think that reflects the resonance of the offering that we have in the market too. But the growth with existing customers is coming from both their increase in investment in infrastructure, the lesser portion of that growth. The bigger portion of the growth that we are getting is from mainly displacing competition. Our model has always been to get a foot in the door with a customer in one part of their infrastructure, and then over time, we can prove our quality, and we can prove out the breadth, and we can displace other providers in the account over time.

[Graham Charlton, CEO at Softcat]

That is exactly what I think we have continued to do, not just this year, but over the last 20 years. That is exactly how our business has grown. I think the particular strength of the performance we have seen over the past two years does reflect that fact that being able now not just to operate in narrow and isolated parts of the infrastructure, but being able to see the whole, help a customer think about a roadmap over three and five years, manage the complex problems they have got in an affordable way, is a rare and highly valuable skill set, which I think is driving the growth that we have seen in share of wallet. I will cover off the rebate point quickly as well because it is not unrelated to that.

[Graham Charlton, CEO at Softcat]

What we have seen Microsoft, but other vendors increasingly do as they have broadened their portfolio into the expanding advantage, is make sure that they are rewarding partners with the right skills to take customers on that journey and not just sell them the kit, but support it and evolve it over time as well. Consumption and support is increasingly how vendors are rewarding partners. As I have said, I think we have the skills to do a great job of that, and you can see it in that growth in the rebate income that we are earning as well. But Katy, I will pass to you for the cost.

[Katy Mecklenburgh, CFO at Softcat]

Yep. Fab. Just to add on rebates, we have also put more resource into making sure that we are managing them really well and making sure that we leverage them and bringing them through to the bottom line as well. Not one-offs at all. In terms of the one-off costs, all H2. We talked about the free share award that we have given to employees. It was the 10-year anniversary of our IPO. We have had an extraordinary year, and we wanted to find a way for the whole company to participate in that.

[Katy Mecklenburgh, CFO at Softcat]

We got an awful lot of benefit and goodwill from that. In the numbers as well, are some advisory costs around the GDT acquisition that we closed so late, we did not strip them out and put them into non-underlying. They will be non-underlying in FY 2027. Due to the performance as well, incentives were, I would say, higher than they would normally be and higher than the going rate as well. In terms of quantification for all of those combined low teens, millions in H2, if that is helpful.

[Charlie Brennan, Analyst at Jefferies]

Graham, can I just pick you up on share of wallet? If we take your top 10 customers, I think you said they were about 15% of GP. So in aggregate, that is about GBP 100 million, GBP 10 million per customer. When you take those more successful relationships, where do you think you have got to with your share of wallet with those bigger accounts?

[Graham Charlton, CEO at Softcat]

Well, I do not think they are necessarily actually our most successful relationships. Because the top 10 customers change year on year. Absolutely, they are strong relationships. But what makes our business so strong and sustainable is the depth of those relationships too. Now, customers at the very top end of our income each year will be carrying out some large projects and we will be helping them with that too. But I think our share of wallet with not just those top customers, but with the broader range of customers where we are most entrenched and have built most loyalty, we are probably we can get as high as 80%, 90% share of infrastructure wallet.

[Graham Charlton, CEO at Softcat]

That is because of the skills we have. You do not jump straight to that. You build that trust over many years by proving the quality as well, but we certainly have customers with whom we are doing 80%, 90% and upwards of share of wallet. I would say the average for a mature relationship is probably more in the 70% or 80% range. But yeah, the share of wallet we have on average across the customer base can go orders two, three-fold higher than it is today, for sure.

[Damindu Jayaweera, Analyst at Peel Hunt]

Two more questions, if I may. One is about neoclouds and kind of non-enterprise data centers, let us call them. Obviously, we talked a lot about them with GDT. We understand the opportunity there. But I was wondering, CoreWeave is building neoclouds in Europe and U.K. You hear NVIDIA supporting Nscale deploying data centers here. You also got U.K.'s home to a lot of quant firms who are actually like neoclouds in a way. Two things around here. One is, am I right in thinking you have an opportunity, just like you sell Azure and AWS, to sell these neoclouds to your enterprise customers?

[Damindu Jayaweera, Analyst at Peel Hunt]

Secondly, outside of U.S., which I think gets covered by GDT, do you have an opportunity to sell into these neoclouds if you have staging capability, if you had staging capability like you do over here? The second question I wanted to ask was about the systems implementations. I think you guys have taken it very seriously, de-risk it, run parallel systems. Just an update as to where you are now and how people are using it. Thank you.

[Graham Charlton, CEO at Softcat]

Okay. Thanks, Damindu. The answer to your first question is yes and yes. Can we sell into the neoclouds and other similar organizations? Yes. Do I think there is an opportunity for us to resell the capacity they are creating in the future? Yes. But let us see as well, because I think what the investment cycles, I do not think they are cycles, but the three elements of the AI investment that we are seeing, hyperscalers, neoclouds, and in public sector and private enterprise organizations, shows you that technology is becoming more and more important to society and to economies. AI is only one factor in that, but that growth is sustainable. We will continue to see huge innovation in how that technology gets to the end users, the applications and how they are developed, but then how they are hosted, secured, and moved to the end user devices.

[Graham Charlton, CEO at Softcat]

All of that change gives us a fantastic opportunity. Selling what some of those new providers will be taking to market, I think we've got an opportunity there. Equally, I think the way the large language models are consumed and inferenced is an avenue of spend that we'll increasingly be looking after for our customers with our customers. The FinOps capabilities we've created around public cloud consumption will directly apply into those models as well. There isn't just growth in. Because AI's driving growth in traditional infrastructure, but it's also creating these new revenue streams. The offering that we have and the investment that we continue to put in the business, I think positions as well to tap into all of that. The second question on systems, where we're at with that. Do you want to take that one, where we are with Dynamics rollout?

[Katy Mecklenburgh, CFO at Softcat]

Sure. I guess within the numbers, we've got the HR systems that went live months ago. With all of them, we've taken the approach we'll do minimum viable product, and then we will build on that as well. Just to set expectations for ongoing sort of non-underlying costs as well. On the sales system, we have done pilot, and we're just in the process of we're going live in waves. The first wave, I think we've just gone live with, so far, so good. We are very pleased because we are running to time and to budget. All good.

[Graham Charlton, CEO at Softcat]

That looks like the end of questions in the room, so we'll see what we've got coming through on the line, please.

[Operator]

We have a question from George from J.P. Morgan. Please go ahead. Your line is open.

[Joe George, Analyst at J.P. Morgan]

Yes. Hi, guys. Thanks very much for taking my questions. I have two, please. One for Katy and one for Graham. Katy, just firstly on OpEx, it looks like there was quite a big step up sequentially in H2 2026 versus H1. I appreciate there is some one-offs in there, but can you just talk about the evolution going forward in H1 2027? Is it possible that OpEx actually declines sequentially through H1? That feels like it would not be normal, but I guess there are some one-offs in the H2 base.

[Joe George, Analyst at J.P. Morgan]

So just any color on OpEx evolution and seasonality through 2027 would be great, please. Graham, please, just on GDT. Can you share any anecdotal evidence or even hard data just on why you think GDT has the right to win with customers beyond their heritage telco space? Because I guess playing devil's advocate, the GP growth has been quite flat the last few years, except 2026, and it would be great to just get your view on why you think the GP growth can sustainably accelerate, being supported by customers beyond the legacy sort of telco's heritage, please. Thank you.

[Katy Mecklenburgh, CFO at Softcat]

Hi, Joe. Just to answer your cost question. Yeah, we would expect the absolute cost to go down in FY 2027, but a marginal increase once you take out that sort of low teens one-off cost that we talked about earlier, if that makes sense. Perhaps, I guess the other useful metric to help you think about the cost base moving forward is what we are thinking about for headcount growth for 2027, and we grew, on average, headcounts of 10.8%, I think, in FY 2026. So there is probably sort of 1-2 percentage points increased growth in 2027, somewhat just to compensate with the higher than planned growth that we had in 2026.

[Graham Charlton, CEO at Softcat]

The second question on GDT, and the right to win they have beyond their heritage. Yes, there is hard evidence over the past four years, and particularly the last couple of years in their numbers, that their diversification on top of networking into the telcos is absolutely there in the numbers. So they have been broadening their customer base into different segments, and they have been diversifying the technology they sell into those customers. You can see both of those trends clearly in their numbers. We recognize those trends because that is exactly what Softcat has done over the last 20 or 30 years as well. We grew out of specializing mid-market customers and Microsoft solutions and have built a much broader business, the broadest business, I would argue, in our industry over time as well. So we know the motions of that development.

[Graham Charlton, CEO at Softcat]

We recognize them in what they've been doing, and this is why I think we're such an exciting owner for GDT. Because the know-how that we have to help accelerate that track that they're already on is something that we can bring very much to market. The right to win in our industry revolves around two things. It's customer service on the one hand, and technical capability on the other.

[Graham Charlton, CEO at Softcat]

When you put those two things together, particularly around good customer service, you earn the right to growth. That earns you the right to further investment. That gives you the ability to broaden the quality and deepen the quality of what you're offering, and you get into this positive feedback loop that I think you've seen in our numbers over a long period of time. GDT is starting to experience that, and we can accelerate it for them as well. They have got hard data in their numbers over the past two years that that's what's happening to their business as well.

[Joe George, Analyst at J.P. Morgan]

Great. Thank you.

[Operator]

We have a question from Andrew Ripper from Panmure Liberum. Please go ahead. Your line is open.

[Andrew Ripper, Analyst at Panmure Liberum]

Good morning. Thanks very much indeed. A couple from me, one for Katy, one for Graham. Just quick one for Katy. Can you just give us what is your guidance, please, for share-based payments charge for FY 2027? For Graham, just going back to GDT. At the end of your section of presentation, you rattled off, I think, a couple of examples of where you have had customer interactions and interest already in the deal. I wonder if you have had gone through an exercise in terms of trying to size the sort of the one plus one equals three opportunities in terms of customer synergies and in particular looking at Softcat's U.K. customers, which could benefit from the enhanced offering in the U.S. Have you got any sort of way that you could size that potential opportunity for us? Thanks.

[Katy Mecklenburgh, CFO at Softcat]

That is a very specific question, Andrew. I do not think we have got specific guidance, but I guess if you had to, I would go back and look at what FY 2025 was, and I would use that as a proxy moving forward. Do not think it will be exact, but it will probably give you a good idea.

[Graham Charlton, CEO at Softcat]

On GDT, yes. I have been in many calls, not just over the last few weeks, but over the last few years, where, as I have said, for a long time, customers are really interested in how we can support them outside of the U.K. They tend to be larger, more complex customers. Our share of wallet in those large and complex customers is much smaller than our average customer base because this is an area of our offering that has developed more recently. As I have already mentioned in the previous question, our heritage is in the mid-market and Microsoft. We have been an enterprise-grade reseller now for the best part of a decade.

[Graham Charlton, CEO at Softcat]

I think our large and complex or enterprise-grade customers are about 20% of our income today. They have been growing at double-digit rates like the rest of the customer base. Today, I think we get somewhere between 3% and 5% of our income from our multinational business. These are hot growth areas, and it is very hard to put an exact number on it. The other way of saying it as well is, as well as giving us new growth opportunity because we are credible for business that we were not, before we started to build our multinational business and before we bought GDT. More and more customers in our customer base will have to start to think about their IT infrastructure in international terms.

[Graham Charlton, CEO at Softcat]

When you look at where to place data centers, how to access the right compute storage, how to secure and connect things, our customers are going to increasingly have to look at how they deploy that globally in order to get it, in the most cost-effective and secure way as well. I don't just think it gives us a new opportunity. It maintains our relevance in the market over what I think will happen to the industry over the next 10 or 20 years as well. Very hard to put an exact number on it.

[Andrew Ripper, Analyst at Panmure Liberum]

Thanks, Graham.

[Operator]

Thank you. It appears there are currently no further questions. With this, I'd like to hand the call back over to management team for any additional or closing remarks.

[Graham Charlton, CEO at Softcat]

Great. Well, thank you. Really appreciate, as I said before, your time and attention today. We are delighted with the exceptional results we're able to put out to the market. We're even more excited about the opportunity ahead. We will keep you posted on progress, but thanks again for your time today.

Participants

Executives

• Graham Charlton, CEO
• Katy Mecklenburgh, CFO

Analysts

• Damindu Jayaweera, Analyst at Peel Hunt
• Carla Courthial, Analyst at Bank of America
• Balajee Tirupati, Analyst at Citi
• Charlie Brennan, Analyst at Jefferies
• Joe George, Analyst at J.P. Morgan
• Andrew Ripper, Analyst at Panmure Liberum