Softcat’s strong results not enough to prevent sell-off

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Softcat’s strong results not enough to prevent sell-off
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FTSE 250 IT infrastructure products specialist Softcat (LON:SCT) reported a 29.9% increase in revenues for the year ended 31st July as it broke £1 billion in annual sales. Profits before taxation were up by 35% at £68.1 million. Despite these improvements, shares in Softcat dropped by 9.13% to 718.76p (as of 14:45 BST).

Management did issue warnings about macro-economic uncertainties and tough comparatives after the firm benefited from exceptional market conditions this year, but said that they believe the company will achieve further profitable growth in 2019.

CEO Graham Watt commented: “I’m delighted to report on a very successful year for Softcat with revenue surpassing £1 billion for the first time, net profit margin rising, and cash conversion being maintained at close to 100%. Revenue growth was 30% and operating profit was up on the prior year by 36%, driven by successful execution of our simple strategy but also supported by exceptionally good market conditions. The adoption of technology change continues to gather pace, as customers take the opportunity to embrace the benefits of digital transformation. In 2018 we saw customers from all sectors invest and this is reflected in our customer metrics. Both revenue and gross profit per customer increased significantly, as we benefited from a strong market and the increasing trust placed in us by our clients. Our long-term strategy of growth through sustained investment means we remain well-positioned to keep pace with the accelerating needs of customers.”

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