Bytes Technology signals income growth of a third

The market cheered news that Bytes Technology’s full-year income is expected to grow by a quarter, sending its shares surging on Wednesday. 

Bytes, a software, security and cloud services specialist, listed on the London Stock Exchange in December, with a secondary listing on the JSE, after a demerger that created R13bn in value for Altron shareholders.

Altron had argued that the true value of the UK business was not fully reflected in its share price. Since listing, shares of Bytes have risen almost 32%, valuing it at R21.6bn on the JSE.

Bytes said it “enjoyed another upbeat year with results ahead of expectations”.

Gross invoiced income grew in the year to end-February 2022, increasing more than 26% to about £1.2bn (R23.62bn). Gross profit grew 20%, with adjusted operating profit up 23%.

Shares in Bytes were up 7.92% to R89.28 in morning trade on Wednesday. 

Bytes Technology CEO Neil Murphy said: “The last year has seen Bytes continuing to strengthen its market position in cloud, security and annuity software and services, working with some of the world’s most successful software companies. We are making good progress with our strategy and are well positioned to deliver on the significant opportunity ahead of us.”

The group said cash collections continued to be strong and cash conversion for the business is expected to be “well over 100%”, with cash on the balance sheet of £68m at the end of the period.

Bytes expects to release its full-year results on May 24.

Bytes is the biggest reseller of tech giant Microsoft’s products in the UK and is chasing a market of 42,000 private sector companies, which collectively spent about £105bn on IT in 2019. 

The company has a 3% share of the UK software market, valued at £23.4bn three years ago. This is expected to grow at a compound annual growth rate of 5%, up to £30.1bn by 2024.  

gavazam@businesslive.co.za