Bytes Technology Group (LSE:BYIT) reported gross profit of £97.1m for the six months to 31 August, up 17.8% on £82.4m a year earlier, as the London-listed software, security and cloud solutions specialist confirmed the upgraded full-year guidance it flagged last month.
Revenue rose 18.7% to £128.3m from £108.1m, while gross invoiced income, the company's preferred measure of income billed to customers, climbed 19.6% to £1,605.2m.
Operating profit increased 6.6% to £35.3m, with the operating profit margin against gross profit falling to 36.4% from 40.2%, after the company absorbed around half of the around £4.5m of cost normalisation flagged at its full-year results, covering bonuses and share-based payments returning to more typical levels.
Public sector gross profit rose 23.1% and private sector gross profit grew 14.6%, with the private sector margin against gross invoiced income at 12.2%, reflecting continued customer migration from enterprise agreements to cloud solution provider (CSP) arrangements.
Cash stood at £68.4m at the half-year end, down from £82.3m a year earlier, with cash conversion of 45.7% against 34.4% in the prior-year period; the company said this reflects its normal weighting of cash generation toward the second half.
Bytes returned £41.3m to shareholders in the half, including a £16.3m final dividend and completion of a £25m share buyback, and declared an interim dividend of 3.3p, up 3.1% on last year's 3.2p.
Earnings per share rose 6.1% to 12.76p from 12.03p.
Bytes upgraded its full-year guidance on 17 September following a stronger-than-expected first half, and the board continues to expect full-year gross profit growth in the low to mid-teens percentage range and operating profit growth in the low to mid single digits, excluding any contribution from the CyberOne acquisition.
"We are very pleased the changes we made to the business last year are evident in our performance," said chief executive Sam Mudd, adding that Microsoft's next round of partner incentive changes, taking effect this month, had been planned for and included in guidance.
After the period end, Bytes exchanged contracts to acquire CyberOne, a UK managed cyber security services provider built on Microsoft technology, for initial consideration of £19.4m funded from existing cash, with further performance-related payments of up to £18m over the following 16 months; completion is expected by the end of October, subject to National Security and Investment Act clearance.
The company said CyberOne's post-acquisition operating profit in the current financial year is expected to be offset by amortisation of acquired intangible assets, with a positive contribution to earnings per share forecast for FY28.
Bytes said second-half trading will be measured against a stronger prior-year comparative, with costs weighted toward the period when commission accelerators apply and new sales intakes joining in November begin building capacity for the following financial year.