Softcat purrs as customers buy early to dodge Microsoft hikes

Price rises were a nightmare, right? Not for everyone!

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Microsoft UK price rises that kicked in at the start of this year weren't bad news for everyone in the country – IT reseller Softcat saw software sales swell as customers purchased licences early to avoid the hefty hike.

Back in October, Microsoft said the cost of on-premises and cloud services would rise by 13 and 22 per cent respectively from 1 January, claiming depreciation of the UK pound had forced its hand.

Customers heeded those warnings, said Softcat CEO Martin Hellawell. "[Demand] didn't kick in until December, but we saw a very good month of sales and a lot of that was Microsoft-related, as people tried to avoid that price rise."

Softcat, which floated on the London Stock Exchange in November, told the City today that it generated total sales of £378.5m for the six months ending 31 December, up 28.9 per cent year-on-year.

Software revenues went up 38.9 per cent in the trading period to £193.4m, though the company did not break down how much of this was generated after Microsoft's confirmation of changes to price. Elsewhere in the numbers, hardware jumped 14.5 per cent to £126.3m, and the reselling of third-party IT services grew by a little more than a third to £58.7m.

Operating profit was up to £20.8m from £15.3m, and after finance costs and tax, net profit was £16.75m, up from £11.9m in the prior year.

The January price rise applied to Open License Agreement; Open Value and Open Value Subscription Agreement, Microsoft Products and Services Agreement, Select/ Select Plus Agreement, ISV Royalty and Distribution Agreement, Service Provider License Agreement, Cloud Solution Programme. From 1 February, Syndication and Online Subscription Programme went up.

Microsoft was one of a batch of technology companies to react to the currency movement following the EU referendum, including VMware, Adobe, Apple, HPE, Dell, Lenovo and Asus.

The potential problem for Redmond is that sales could be on the relatively quiet side this year since customers rushed to buy licences before 1 January. ®


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