Revenue falls, gross profits rise for Bytes Technology

15th Oct 2024 08:53

(Sharecast News) - Bytes Technology Group shares were in the red on Tuesday morning, after it reported a 2.9% drop in revenue to £105.5m, but a 13.7% increase in gross invoiced income (GII), reaching £1.23bn.

The FTSE 250 company said the growth was largely down to the software segment, with significant contributions from public sector clients, including ongoing contracts with the NHS and HMRC.

Bytes also saw a rise in gross profit, up 9% to £82.1m, supported by a favourable sales mix.

Operating profit for the first half of the 2025 financial year increased 16.3% to £35.6m, reflecting the group's focus on efficiency and investment in growth initiatives.

Earnings per share rose by 19.5% to 12.67p, while cash conversion for the period stood at 56.2%, with Bytes expecting stronger cash flows in the second half of the year.

The group closed the period with £71.5m in cash, up from £51.7m a year earlier.

Operationally, Bytes said it had expanded its workforce by 7% and continued to grow its presence across the UK, opening new offices in Sunderland and Portsmouth.

The group also reported selling over 130,000 Copilot licences, generating £39m in annualised GII.

Vendor partnerships remained strong, with Bytes receiving multiple awards from leading technology firms, and the company renewed its Microsoft Azure Expert MSP status.

Looking ahead, Bytes said it expected to capitalise on ongoing demand in cloud computing, cybersecurity, and AI, positioning it well for the rest of the financial year despite challenging market conditions.

The board raised the interim dividend by 14.8%, to 3.1p per share.

"I am pleased to report another set of positive results for BTG, with a strong increase in operating profit, driven by continued demand for our broad range of software, solutions and services," said chief executive officer Sam Mudd.

"Despite the challenging economic climate and political uncertainty over the past six months, we have increased our share of wallet amongst our existing customers as they continue to invest in their IT needs.

"We have also expanded our client base in both the public and corporate sectors."

Mudd said the group had again made strategic investments in personnel, internal systems, and new vendor accreditations to drive future growth and support its customers.

"Our strong relationships with Microsoft and other top tier vendors allow us to seize exciting opportunities in cloud adoption, workload migrations, storage, security, and virtualisation technologies.

"Meanwhile, we continue to collaborate with our customers to enable their teams to roll-out the use of emerging AI technology, such as Copilot.

"With sustained demand in all these areas, and our expanding technical capabilities, these will be our key focus areas in the remainder of FY25 and beyond."

At 0835 BST, shares in Bytes Technology Group were down 6.89% at 459.2p.

Reporting by Josh White for Sharecast.com.