Bytes Technology credits strategic changes for strong interim results

Bytes Technology Group PLC on Tuesday described its interim financial performance as "strong", crediting strategic changes, and announced the acquisition of a UK cybersecurity firm.

The Surrey, England-based enterprise software company reported a 3.6% rise in pretax profit to £40.0 million for the six months that ended August 31 from £38.6 million a year earlier.

Revenue rose 19% to £128.3 million from £108.1 million. Gross profit was up 18% to £97.1 million from £82.4 million, while operating profit was £35.3 million, up 6.6% from £33.1 million.

"We are very pleased the changes we made to the business last year are evident in our performance," Bytes Chief Executive Officer Sam Mudd said, describing the first-half as "strong".

Mudd said the company has evolved from a licensing-led reseller into a customer-centric, solutions- and services-led business. Bytes also has adjusted to Microsoft partner incentive changes.

Microsoft Corp's next set of partner incentive changes takes effect this month, the Bytes CEO said, adding that these are separate from the changes made in January 2025, which have now annualised.

From January last year, Microsoft changed the mix of partner incentives, reducing some of its transactional enterprise agreement incentives to shift partner focus to the larger consumption-based incentives available under the cloud solution provider plan, and growing incentives available for pre-sale and adoption services.

Bytes lifted its interim dividend to 3.3 pence, up 3.1% from 3.2p. Earnings per share and headline EPS were both up 6.1% to 12.76p from 12.03p.

Mudd said the strategic changes the group had made in the 2026 financial year were delivering results, with trading ahead of the expectations set at the start of the year. Last month, Bytes upgraded its guidance for financial 2027.

It expects gross profit growth for the full year in the low to mid-teens percentage, with low to mid single-digit percentage growth in operating profit.

Bytes also said it has agreed to acquire CyberOne Ltd, a cybersecurity firm based in London.

The initial acquisition consideration of £19.4 million has been funded entirely from existing cash resources, Bytes said, with further contingent cash payments over the next 16 months depending on performance.

Bytes said completion of the CyberOne takeover if subject to clearance under the UK's National Security and Investment Act, which is expected to be received shortly.

Bytes shares were down 0.6% to 459.60 pence in London on Tuesday morning, but were up 0.9% to ZAR100.30 in Johannesburg.

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