Softcat Reports High Teens Growth in Gross Profit for FY2025

FY2026 outlook: underlying growth is solid, reported growth will look softer

There’s a useful distinction in the outlook. If you strip out the significant incremental contribution from FY2025’s large deals, Softcat expects low double-digit gross profit growth and high single-digit operating profit growth in FY2026. That feels sensible and steady.

However, when you include those large FY2025 deals in the comparative base, the reported growth rates naturally compress to high single-digit for gross profit and low single-digit for operating profit. This is classic “tough comps” territory: last year’s big wins make next year’s growth look slower, even if the underlying engine is still humming.

For reference, operating profit excluding the significant incremental contribution from large deals in FY2025 is c.£170m. That gives investors a rough base to think about the FY2026 growth percentages that management has flagged.

My take: quality cash, healthy core, and a reminder that big deals are lumpy

• Positives: High-teens gross profit growth and top-end cash conversion are hard to argue with. It signals demand resilience, solid execution, and tight cash discipline. The consistency of adjusted guidance compared to previous statements adds credibility.
• Caution flags: The dependence on large projects to turbocharge Q4 is a double-edged sword. It’s great when they land, but it can make year-to-year growth choppy. Management has wisely set expectations for a slower reported growth rate in FY2026 due to the tough comparator.
• Valuation context: Not disclosed here, but markets will likely reward the cash performance while weighing the step down in reported growth next year. The split between underlying and reported growth should prevent overreactions if read carefully.

What is not disclosed in this RNS

• Revenue, gross profit and operating profit in absolute terms for FY2025 – not disclosed.
• Order backlog or pipeline detail – not disclosed.
• Dividend or capital allocation updates – not disclosed.
• Any changes to strategy beyond the new sales system implementation costs – not disclosed.

What to watch for on 22 October 2025

• Exact FY2025 numbers: Gross profit, adjusted operating profit, and cash flow to validate the “top end” cash conversion comment.
• Large deal dynamics: How much of FY2025’s performance uplift came from large projects, and how repeatable is that mix into FY2026.
• Margin drivers: Any colour on mix shift towards higher-margin services and the impact of the new sales system on productivity.
• Non-underlying items: Size and timing of acquisition-related costs and sales system implementation costs.
• FY2026 guidance precision: Whether the company narrows the growth ranges or provides additional scaffolding around that c.£170m operating profit base.

Bottom line

Softcat has delivered another year of robust growth and enviable cash generation, with a late push from big-ticket solutions work. The FY2026 framing is realistic: underlying growth remains healthy, but the official reported rates will look softer because FY2025 was flattered by large deals.

For long-term investors, the message is steady and reassuring. The cash engine is intact, the core franchise is growing, and expectations have been set sensibly for the coming year.