Softcat (LON:SCT) Releases Quarterly Earnings Results

Key Points

• Softcat delivered strong FY 2026 results: gross profit rose 24.7% to £616.3 million and underlying operating profit increased 19.4% to £215.1 million, supported by customer growth and higher gross profit per customer.
• Profitability came under pressure as operating costs grew faster than gross profit, while lower-margin projects, Microsoft licensing changes and one-off costs weighed on margins.
• FY 2027 growth is expected to moderate, with management forecasting high-single-digit underlying operating-profit growth excluding GDT. The acquisition should expand Softcat’s U.S. presence and AI-related infrastructure opportunities, but integration costs and higher leverage are expected initially.

Softcat (LON:SCT - Get Free Report) released its earnings results on Wednesday. The company reported GBX 75.80 earnings per share for the quarter, Digital Look Earnings reports. Softcat had a return on equity of 45.16% and a net margin of 8.06%.

Here are the key takeaways from Softcat's conference call:

• 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%.
• 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.
• 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.
• 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.

Softcat Price Performance

Shares of LON SCT traded down GBX 143 during mid-day trading on Wednesday, reaching GBX 1,781. The company's stock had a trading volume of 1,520,119 shares, compared to its average volume of 1,785,877. The stock has a market capitalization of £3.83 billion, a P/E ratio of 25.41, a P/E/G ratio of 11.51 and a beta of 0.58. The stock has a 50-day moving average of GBX 1,943.73 and a two-hundred day moving average of GBX 1,734.73. Softcat has a 1-year low of GBX 1,083 and a 1-year high of GBX 2,134. The company has a debt-to-equity ratio of 13.07, a quick ratio of 1.38 and a current ratio of 1.25.

Analyst Ratings Changes

Several research firms recently commented on SCT. JPMorgan Chase & Co. boosted their price objective on shares of Softcat from GBX 1,950 to GBX 2,300 and gave the stock an "overweight" rating in a research note on Monday, September 7th. Deutsche Bank Aktiengesellschaft lowered Softcat to a "hold" rating and boosted their price target for the stock from GBX 1,800 to GBX 2,140 in a research note on Wednesday, August 26th. Berenberg Bank boosted their price target on Softcat from GBX 1,950 to GBX 2,400 and gave the company a "buy" rating in a research note on Monday, September 21st. Finally, Jefferies Financial Group reiterated a "hold" rating and issued a GBX 1,700 price target on shares of Softcat in a report on Wednesday. Four investment analysts have rated the stock with a Buy rating, three have given a Hold rating and one has assigned a Sell rating to the company's stock. Based on data from MarketBeat.com, the stock currently has a consensus rating of "Hold" and an average target price of GBX 1,993.75.

Insiders Place Their Bets

In related news, insider Graham Charlton bought 176 shares of the firm's stock in a transaction on Monday, September 7th. The shares were bought at an average price of GBX 2,045 per share, with a total value of £3,599.20. Also, insider Kathryn Mecklenburgh bought 176 shares of the business's stock in a transaction on Monday, September 7th. The stock was purchased at an average cost of GBX 2,045 per share, for a total transaction of £3,599.20. Insiders acquired a total of 384 shares of company stock valued at $749,739 over the last ninety days. Corporate insiders own 2.91% of the company's stock.

Trending Headlines about Softcat

Here are the key news stories impacting Softcat this week:

• Positive Sentiment: Softcat reported fiscal 2026 profit growth of 19.4% and revenue growth of 35.4%, demonstrating continued demand for IT products and services. Softcat FY2026 profits rise 19.4% as revenue grows 35.4%
• Positive Sentiment: The company raised its dividend after profit growth exceeded expectations, supporting the income-investment case. Softcat lifts dividend as profit growth beats expectations
• Positive Sentiment: Softcat posted quarterly earnings per share of 75.80 pence, with an 8.06% net margin and 45.16% return on equity, highlighting strong profitability.
• Positive Sentiment: A deal to move into the U.S. market through GDT gives Softcat an additional international growth opportunity and broadens its addressable market. Softcat posts double-digit profit growth and moves into U.S. market with GDT deal
• Neutral Sentiment: Analysts have highlighted an upgraded profit outlook and robust underlying IT demand, although these positives are being weighed against forward-growth concerns. What Softcat’s upgraded profit outlook and robust IT demand mean for shareholders
• Negative Sentiment: Fiscal 2027 guidance points to slower growth, prompting investors to reduce expectations even after the strong results. Softcat shares fall as outlook points to slower growth
• Negative Sentiment: Jefferies reaffirmed a “Hold” rating and set a GBX 1,700 price target, below the reported opening price, indicating limited near-term upside in the broker’s view.

Softcat Company Profile

Softcat plc 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.