Bytes Technology H1 operating profit to be 'marginally' lower than last year

(Sharecast News) - Bytes Technology warned on Wednesday that first-half operating profit was set to be "marginally" lower than last year amid a "challenging" macro environment. Ahead of its annual general meeting, the software, security, cloud and AI services specialist said trading across the first months of the year has been impacted by a challenging macroeconomic environment. This has led to some deferral of customer buying decisions, particularly in the corporate sector.

The company had already said in its final results that it had shifted from a generalist model to specialised, customer-segment-focused teams, in line with its commitment to customer centricity.

It said on Wednesday that while this transition has resulted in a longer-than-expected readjustment period, it positions the group "to deliver more relevant solutions and drive sustainable services annuity income growth" during the second half of the financial year ending 28 February 2026 and beyond.

"Also, as previously noted, the impact of changes to Microsoft enterprise incentives is weighted more to the first half due to high levels of renewals in March and April around the public sector year end and June around Microsoft's year end; whilst the benefit from services growth, where profit is spread over the contract term, builds up across the whole year," it said.

For the first half, it now expects gross profit in line with last year and operating profit marginally lower, followed by more normalised growth in both metrics in the second half.

Chief executive Sam Mudd said: "In recent weeks, we've navigated a more challenging macro environment, compounded by the near-term effect of transforming our corporate sales team. While this has affected trading, our value proposition remains strong.

"We're seeing continued engagement, a healthy pipeline and remain confident that as these sales team changes bed in, we will be a stronger business, better aligned to meeting our customer needs and drive sustainable growth."