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Bytes Technology Group plc (LSE:BYIT) has released its financial results for the first half of its fiscal year 2025, covering the six months ending August 31, 2024. The company, a leading provider of software, security, cloud, and AI services in the UK, delivered strong performance despite operating in a highly competitive environment and facing tough macroeconomic conditions.
Financial Performance
Bytes Technology Group’s gross invoiced income (GII) rose by 13.7%, reaching £1,230.2 million compared to £1,081.6 million in the same period last year. The software segment was the primary driver behind this growth, while significant contributions also came from the public sector. Notably, large contracts secured in previous years with the NHS and HMRC experienced continued expansion.
However, overall revenue declined slightly by 2.9%, totaling £105.5 million compared to £108.7 million in H1 FY24. This dip was primarily attributed to a decrease in hardware GII, which impacted the total revenue figure more than the growth in software gross profit (GP). As hardware revenue accounts for the full GII amount, while only the GP from software is included in revenue, the shift towards software sales led to a marked increase in the gross margin. The gross margin percentage jumped from 69.3% to 77.8%, despite the revenue decline.
Gross profit grew by 9% to £82.1 million, compared to £75.3 million in H1 FY24. This increase reflects a higher volume of public sector sales secured through competitive tenders, though the gross profit to GII ratio dipped slightly from 7.0% to 6.7%. Both key revenue streams—software and internal services—grew significantly, by 11.3% and 28.1%, respectively.
Operating profit for the period increased by 16.3%, reaching £35.6 million compared to £30.6 million in the same period last year. This was accompanied by a rise in the operating profit to GP ratio, which increased from 40.6% to 43.4%, showcasing the company’s efficiency in balancing investment with cost management.
Earnings per share rose by an impressive 19.5%, up to 12.67 pence from 10.6 pence in H1 FY24. Bytes also achieved a cash conversion rate of 56.2%, in line with expectations and reflecting seasonal cash flow patterns. Rolling cash conversion for the 12 months leading to August 31, 2024, stood at 112.6%, meeting the company’s sustainable annual target of 100%. By the end of the half-year, the company’s cash reserves were at £71.5 million, a significant increase from £51.7 million a year earlier.
Operational Milestones
Bytes continued to strengthen its workforce, expanding headcount by 7% to 1,130 employees, with a focus on bolstering its sales and service delivery teams. The company also expanded its physical presence, opening new offices in Sunderland and Portsmouth, and increasing floor space at its London office.
In terms of product success, Bytes has sold over 130,000 Copilot licenses across its client base, generating annualized GII of around £39 million. Internally, the company has also adopted Copilot for its own use. Further, Bytes renewed its status as a Microsoft Azure Expert MSP and secured new specializations in security and cloud services. The company received multiple vendor awards from partners such as Palo Alto, HP, and Adobe, further reinforcing its market leadership.
Outlook
Bytes Technology Group is optimistic about the second half of FY25, aiming to continue executing its growth strategy. The company will focus on strengthening customer relationships, deepening vendor partnerships, and leveraging the technical and commercial expertise of its teams. With strong demand drivers in the areas of cloud computing, cybersecurity, and AI, Bytes is well-positioned to maintain momentum for the remainder of the fiscal year.
