Bytes Shares Plummet by One-Third After First Half Profit Warning

Bytes Technology Group saw its share price plummet nearly 30% on Wednesday following a cautionary announcement regarding lower-than-expected operating profits for the first half of its fiscal year.

The stock closed the day at R86.00, reflecting a 29.25% drop from the previous day’s close.

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On Wednesday morning, the group issued a notice to shareholders via Sens prior to its annual general meeting scheduled for 2pm, stating that trading in the early parts of the year has been impacted by a “challenging macroeconomic landscape.”

Operating profit ‘slightly lower’

This scenario has led to “some postponement” of purchasing decisions among clients, particularly in the corporate sector.

In its notice, the group projected that gross profit for the six months ending 31 August 2025 is expected to be in line with the prior year, while operating profit is likely to be “slightly lower.”

The group had previously mentioned its expectation for more normalized growth.

Bytes highlighted that the impact of changes to Microsoft enterprise incentives is more significant in the first half, given the high renewal rates in March and April that coincide with the public sector year-end, as well as in June, which aligns with Microsoft’s fiscal year-end.

“The benefits from services growth, where profits accumulate over the life of the contract, increase throughout the entire year,” the company noted.

CEO Sam Mudd remarked: “We’ve recently been navigating a more challenging macro environment, compounded by the immediate effects of restructuring our corporate sales team. Although this has influenced trading, our value proposition remains strong.”

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