Bytes Technology revenue rises, operating profit falls

(Sharecast News) - Bytes Technology Group shares were falling on Tuesday morning, after it reported a rise in revenue and gross invoiced income but a fall in operating profit, as the software and cloud services provider adjusted to structural and industry changes. For the six months ended 31 August, gross invoiced income increased 9.1% to £1.34bn, while revenue grew 2.5% to £108.1m.

Gross profit edged up 0.4% to £82.4m, but operating profit declined 7% to £33.1m, reflecting higher headcount and wage costs.

The FTSE 250 group maintained a strong balance sheet, with cash rising 15.1% to £82.3m, and declared an interim dividend of 3.2p per share, up from 3.1p a year earlier.

Bytes said growth in services, up more than 40%, helped offset a 3.5% decline in software gross profit.

Public sector activity, which was more exposed to changes in Microsoft's partner incentives, rose 1.6%, while corporate business adjusted to a new sales structure launched earlier in the year.

Chief executive Sam Mudd said the group "delivered a resilient performance, building positive momentum through the period as we settled into our new corporate sales structure."

"Despite the challenging economic climate, and our internal and industry changes over the past six months, we have maintained our share of wallet amongst our existing customers as they continued to invest in their IT needs and we have continued to expand our client base in both the public and corporate sectors," she added.

Mudd highlighted the company's success in adapting to Microsoft's incentive changes and the continued strength of customer retention.

"We are particularly pleased that retention has remained very high, consistent with prior periods, amongst both our sales team and customer base which provides a solid foundation for future growth," she said.

"Our passionate, talented, and experienced staff continue to position BTG to provide high-quality licensing advice, technical enablement and support to meet our customers' needs.

"This differentiates us from the competition and underpins our confidence for the remainder of the year."

Looking ahead, Bytes said it was well placed to capitalise on demand for cloud computing, cybersecurity and AI services.

"We have a strong pipeline and have started H2 FY26 well but are mindful that comparatives will be impacted by the particularly strong trading performance we saw in the last few months of the prior financial year," the company said.

"We remain confident of delivering a full year outcome within the range of market expectations."

At 0924 BST, shares in Bytes Technology Group were down 8.62% at 376.48p.

Reporting by Josh White for Sharecast.com.