Softcat FY2025: Record Gross Profit, Strong Cash, First Acquisition
Softcat has posted another record year to 31 July 2025, extending its 20-year run of double-digit gross profit growth. The numbers are robust across the board, with big ticket projects in the second half and continued progress in security, data centre and networking. There is also a first-ever acquisition in data and AI, and a clear plan to invest in systems for future scale.
| Key metric | FY2025 | FY2024 | Change |
|---|---|---|---|
| Gross invoiced income (GII) | £3,617.0m | £2,852.2m | +26.8% |
| Revenue (IFRS 15) | £1,458.4m | £962.6m | +51.5% |
| Gross profit | £494.3m | £417.8m | +18.3% |
| Underlying operating profit | £180.1m | £154.1m | +16.9% |
| Statutory operating profit | £172.9m | £154.1m | +12.2% |
| Underlying basic EPS | 69.5p | 59.7p | +16.4% |
| Basic EPS | 66.6p | 59.7p | +11.6% |
| Underlying cash conversion | 95.6% | 95.9% | (0.3)ppts |
| Net cash | £182.3m | £158.5m | +£23.8m |
| Total ordinary dividend | 29.3p | 26.6p | +10.2% |
| Special dividend | 16.1p | 20.9p | (23.0)% |
What drove the beat: big projects, security and infrastructure
Softcat’s preferred top-line lens is GII (gross invoiced income) because IFRS 15 nets down software and some services. GII rose 26.8% to £3.62 billion, with growth accelerating to 32.8% in H2 thanks to “larger solutions projects”. Hardware led the way (up 74.5% by GII) on data centre, networking, server and compute demand. Software and services also grew double-digit, with security again a standout and services buoyed by some high-margin support deals.
The flip side of those chunky projects is margin dilution. GP as a percentage of GII fell to 13.7% from 14.6%, and the underlying operating margin nudged down to 5.0% from 5.4%. That is a mix effect rather than a pricing problem: a small number of very large, low-margin transactions pulled the averages down, particularly in H2.
Customer momentum: more spend per customer, base still expanding
The customer base ticked up 1.6% to 10.2k, while gross profit per customer jumped 16.5% to £48.5k. That signals Softcat is deepening relationships and cross-selling across more technology towers. Satisfaction remains elite, with a 98% customer satisfaction score and a net promoter score of 64.
One customer accounted for £326.7m of revenue in the year, “a considerably lower proportion of gross profit”. That concentration is worth watching, but the gross profit caveat matters – the risk to earnings is less than the revenue headline implies.
Cash, balance sheet and an unusual working-capital swing
Cash conversion stayed excellent at 95.6% and the Group remains debt free with £182.3 million of cash and cash equivalents. Softcat is lifting its minimum operating cash “floor” to £90 million from FY2026, reflecting scale and larger average deal sizes.
Note the mechanics of a very large order at year-end under IFRS 15: revenue is not yet recognised, but cash moved. This inflated contract liabilities by £290.3m, inventories by £149.5m, and created a £72.6m contract fulfilment asset. It is timing, not a deterioration – but it will unwind as delivery criteria are met.
Dividends: rising ordinary, smaller special
The Board proposed a final ordinary dividend of 20.4p, taking the full-year ordinary to 29.3p, up 10.2%. There’s also a special dividend of 16.1p (lower than last year’s 20.9p), both payable on 16 December 2025 if approved. Since IPO, Softcat will have returned £661.9 million to shareholders.
My take: the trimmed special looks sensible given systems investment and a higher cash floor. The ordinary remains nicely progressive, underpinned by strong cash generation.
First acquisition: Oakland adds data and AI consulting firepower
Softcat bought Oakland Group Services in April for an initial £8.0 million cash, plus contingent consideration tied to performance. Goodwill of £6.7 million reflects expectations of future growth in data, automation and AI services. Early signs are encouraging, with sales qualified leads “slightly ahead of expectations”.
In the short term Oakland contributed £1.8 million of revenue and a £0.3 million loss before tax (pre amortisation) in the post-acquisition period. That’s fine – consulting capability takes time to integrate and scale through Softcat’s 10k-strong customer base.
Strategic investment: systems, offices and people
Non-underlying costs of £7.2 million mainly reflect the build-out of a new cloud-based sales system (Microsoft Dynamics 365) and an HR system. These are expensed under SaaS accounting rules. The Group also upgraded major offices in London, Birmingham and Bristol and grew average headcount by 7.3% to 2,639, with a focus on technical, specialist and sales support roles.
Opinion: this is the right moment to modernise the tech stack. If Softcat wants to keep winning larger, more complex projects, automation and integrated data will matter as much as vendor line-cards.
Outlook FY2026: growth continues, heavier in H1
Guidance is unchanged from the August update. Excluding the big incremental contribution from FY2025’s large projects, the Board expects low double-digit gross profit growth and high single-digit underlying operating profit growth in FY2026. Including those large deals in the comparative, reported growth moderates to high single-digit GP and low single-digit underlying operating profit.
Importantly, management expects growth in FY2026 to be first half weighted because committed large projects are slated for H1, subject to customer and vendor timing.
Positives and pressure points to watch
- Positives: 18.3% gross profit growth, 16.9% underlying operating profit growth, 95.6% cash conversion, debt-free balance sheet and rising ordinary dividend. The move into data/AI consulting widens the addressable market.
- Margins: GP/GII and underlying operating margin dipped due to mix. If large, low-margin projects persist, headline margins may remain under pressure even as profit grows.
- Execution risk: FY2026 is H1-weighted – any slippage in delivery schedules could shuffle growth between halves.
- Working capital: the very large order has created big balance sheet items that should unwind; timing matters for reported cash at points in the year.
- Customer concentration: one customer was >10% of revenue, albeit a smaller share of GP. Keep an eye on exposure and renewals.
Why this matters for investors
Softcat is proving it can scale beyond resale into larger, complex solutions without losing its cash discipline or culture. The Oakland acquisition plants a flag in a fast-growing data/AI services niche, where customers are looking for help to organise data and deploy AI safely. The dividend story remains attractive, with capacity for specials when capital is genuinely surplus.
Net-net: structurally positive, with near-term optics shaped by deal phasing and mix. If management lands the H1 pipeline and continues to broaden higher-value services, the medium-term earnings quality should improve even if reported margins bob around.
Want more colour?
Management will host an investor and analyst call at 9.30am UK time on 22 October 2025. Webcast link: https://brrmedia.news/SCT_FY25
