In This Article:
Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Bytes Technology Group PLC (FRA:9NY) reported a 15.2% increase in gross invoiced income, surpassing the 2 billion mark for the first time.
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The company achieved a 17.1% increase in operating profit, demonstrating strong financial performance.
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Bytes Technology Group PLC maintained over 100% cash conversion, enabling significant shareholder returns while sustaining a strong balance sheet.
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The company experienced a 19% growth in services, contributing significantly to gross profit.
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Bytes Technology Group PLC has a strong partnership with Microsoft, being the number one partner in the UK for overall revenue influence, which supports their growth strategy.
Negative Points
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The company faced a challenging macroeconomic environment, with uncertainty impacting corporate business during the year.
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There was a decline in the GP to GII conversion rate from 8% to 7.8%, attributed to changes in the mix rather than margin decline.
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The company experienced a decline in employee net promoter score (EMPS) from 71 to 57%, reflecting internal and external changes.
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Bytes Technology Group PLC's growth in new customer acquisition was relatively low, with only 85 net new customers added in the last 12 months.
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The company anticipates absorbing approximately 1.6 million in costs related to national insurance contribution changes, which could impact future profitability.
Q & A Highlights
Q: Are there opportunities to augment your services and grow faster through M&A, especially with the new Microsoft incentive structure? A: (CEO) We are happy with our current organic strategy and attract technical talent as needed. While M&A could accelerate growth, we are patient and selective, ensuring cultural alignment and strategic fit. Regarding Microsoft public sector incentives, they have partially reversed reductions, and we expect this status quo to continue for the foreseeable future.
Q: What drove the strong growth in the public sector, and can this continue? Also, are you positioned to gain market share with CSP changes? A: (CEO) Our public sector growth reflects years of investment and strong bidding tactics. We have a strategic focus on the midmarket, which aligns with Microsoft's channel strategy. Our scale and operational efficiency give us an advantage, and we expect to gain market share as smaller partners struggle with CSP changes.
Q: How do you calculate market share, and what is the demand for Microsoft Azure compared to other cloud providers? A: (CFO) We estimate around 6-8% market share in software, less than 0.2% in hardware, and less than 1% in services, totaling about 3%. There is substantial growth in Azure, and we see opportunities across all segments as 83% of data is still on-premises. We also enjoy growth opportunities with AWS.