Shares in Bytes Technology Group PLC (LSE:BYIT), the UK software and IT solutions reseller, slumped 15% to 254p after a trading update that delivered in-line current-year numbers but flagged higher costs ahead that will weigh on profits next year.
Gross profit grew just 2% in the year to February 2026, held back by changes to Microsoft incentive payments and disruption from an internal sales reorganisation.
Performance improved as the year progressed, with gross profit growing around 6% year-on-year in January and February against a tough comparison.
The group ended the year with gross profit of £167 million and operating profit of £62 million, in line with forecasts, and a cash balance of over £98 million after returning £74 million to shareholders.
As for the outlook, while gross profit growth is expected to accelerate into high single or low double digits next year, operating profit is forecast to stay flat as Bytes absorbs £4.5 million of higher technology costs and a return to normal bonus levels.
Chief executive Sam Mudd said: "While I remain mindful of the ongoing macro uncertainty, we see customers continuing to adopt AI and invest in their cloud infrastructure, cyber security and digital workspaces to drive efficiency and competitiveness.
"BTG is well-positioned to support customers as AI moves from experimentation to deployment at scale. With our deep vendor partnerships, strong customer relationships, and ongoing investment in our employees, I am confident in the group's ability to deliver sustainable growth."