FTSE 250 IT services firm Bytes Technology (LON:BYIT) delivered double-digit growth in its H1 2027 results, backed by demand for software, cloud computing and cybersecurity. However, slower operating profit growth and pressure on margins tempered the market’s initial reaction, while its proposed CyberOne acquisition strengthens its ambitions to become a more services-led technology partner.
Bytes Technology investor relations
| Bytes Technology (LON:BYIT) | Price: 434p (-6%) | Market cap: £999.2m |
Key numbers: H1 2027
Six months to 31 August 2026, versus the same period in 2025.
| Metric | HY27 | YoY change |
| Gross invoiced income | £1,605.2m | +19.6% |
| Revenue | £128.3m | +18.7% |
| Gross profit | £97.1m | +17.8% |
| Operating profit | £35.3m | +6.6% |
| Earnings per share | 12.76p | +6.1% |
| Interim dividend | 3.3p | +3.1% |
| Cash | £68.4m | −16.8% |
Source: Company interim results.
Gross invoiced income measures the value of products and services invoiced to customers; it is not equivalent to reported revenue.
The key concern is profitability. Operating profit grew considerably more slowly than gross profit, with operating profit falling to 36.4% of gross profit from 40.2%. Management attributed this partly to approximately £4.5m of previously flagged cost normalisation, including bonuses and share-based payments returning towards more normal levels.
Share price reaction: profit growth disappoints
Shares opened at 480.4p and briefly touched 489.2p, a fresh 52-week high, before reversing lower. Investors appeared concerned that rising costs were absorbing too much of the strong gross-profit growth.
AI opportunity: more than software licensing
CEO Sam Mudd said Bytes had deliberately evolved from a ‘licensing-led reseller into a customer-centric, solutions and services-led business’. Services gross invoiced income grew 41%, while software increased 18.8%.
Management sees AI adoption creating demand for cloud infrastructure, data governance, identity controls, security and employee training. This gives Bytes opportunities to earn revenue beyond Microsoft licences, although enterprise managed-services contracts can take longer to secure.
CyberOne acquisition: strategic fit
| Deal metric | Detail |
| Initial consideration | £19.4m |
| Additional contingent payments | Up to £18m |
| CyberOne revenue, year to July 2026 | £9.5m |
| Recurring income | Around 90% |
| Expected earnings impact | Positive in first full financial year |
CyberOne adds AI-enabled managed cybersecurity, threat detection and a dedicated 24/7 security operations centre. Its recurring contracts could deepen customer relationships and help Bytes capture more spending as businesses deploy AI securely. The deal is expected to be earnings-enhancing, but the full contingent consideration depends on performance.
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What analysts think
Berenberg recently upgraded Bytes to Buy from Hold and raised its price target from 360p to 520p, citing stronger trading and improved guidance. It increased FY2027–FY2029 gross-profit forecasts by 6%, 9% and 12%, respectively. This assessment predates today’s full interim results, so it is not a fresh post-results recommendation.
Sharesify investor verdict
🐂 Bull case
AI, cloud and cybersecurity demand, recurring service revenues and CyberOne could support sustainable growth.
🐻 Bear case
Operating costs are rising faster than gross profit, cash has fallen and Microsoft incentive changes remain a risk.
Bytes reiterated FY2027 guidance for low-to-mid-teens gross-profit growth and low-to-mid-single-digit operating-profit growth, excluding CyberOne. The investment case rests on converting strong technology demand into better operating leverage. Until margins stabilise, investors may remain cautious despite the attractive AI and cybersecurity opportunity.
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