4Sight Holdings, a JSE-listed technology group focused on software distribution and technology services, increased revenue by 29.3% to R748.3 million in the six months to August, compared with R578.7 million a year earlier. Gross profit grew at a much slower pace, rising 2.2% to R259.6 million, while the gross margin narrowed from 43.9% to 34.7%.
The shift in revenue mix was a key factor. 4Sight attributed the lower margin to a greater share of software-as-a-service (SaaS) sales, which generate lower margins than other revenue streams. SaaS revenue increased 51% to R491.3 million, while software licence revenue fell 36% to R25 million.
Operating profit rose 11.8% to R53.9 million, supported by operating expenses that remained unchanged at R205.1 million. Headline earnings per share increased 10.9% to 7.49 cents.
The channel partner business, which distributes software from Microsoft and Sage, two software providers, through a reseller network, accounted for much of the revenue growth. Its sales rose 68% to R365.7 million, but operating profit remained broadly flat at R21.6 million, compared with R21.9 million a year earlier. 4Sight cited pressure from lower-margin SaaS sales and competition among resellers.
Performance varied across the group's other businesses. The unit covering data, AI and automation services increased operating profit by 59% to R18.2 million, which the company attributed to projects developing into larger programmes. Its information technology business, which sells and supports enterprise resource planning and payroll applications, recorded a 3% increase in operating profit to R23.5 million despite slightly lower revenue.
The operational technology unit, which serves mining and industrial customers, saw operating profit decline 17% to R16.9 million. 4Sight attributed the result to margin pressure in mining and weak orders in the previous financial year, although it said the order book had since strengthened. The loss from shared services narrowed to R26.3 million from R28.3 million, which the group linked to organisational changes and the adoption of AI-based automation.
Geographic performance was also mixed. Revenue from South Africa rose 59% to R584.7 million, while revenue from the rest of Africa fell 28.5% to R128.2 million.
Cash generated from operations declined to R32.4 million from R38.5 million. Trade receivables increased 65% to R269.8 million between February and August, outpacing revenue growth. Trade payables rose 45% as resale volumes increased. Cash balances fell 3.5% to R108 million following payment of the final dividend and an earn-out instalment related to earlier acquisitions.
Looking ahead, 4Sight's results statement identifies “super intelligence” as a potential future area of focus, while acknowledging that the capability remains hypothetical.
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