Slogging it out in the licensing sales game is a tough business. Scale is a requisite to compensate for thinning margins, and vendors are constantly chopping away at back-end fees.
Microsoft large account reseller (LAR) Comparex typifies the challenge facing software resellers, and the net margin strain can be seen in their latest set of UK financials for fiscal '13, ended 31 March.
Turnover edged up two per cent to £25.95m, but this was largely due to a bounce in trade with customers outside of Europe from £280,000 in the previous fiscal to £2.6m.
Sales within the European community were flat at £1.3m and in Blighty turnover declined 7.7 per cent to £22m.
Gross profit came in at £3.7m, up from £3.3m a year earlier but an 18.2 per cent rise in admin expenses to £3.44m and distribution costs left an operating profit of £385,000, down from £409,000.
Net profit was £371,000, down nine per cent on the the previous financial year, leaving the company with a 1.4 per cent net margin.
Comparex, part of the German-owned Comparex Group, ended the year with an average of two additional heads, but salary overheads climbed to £2.2m from £2.037m in fiscal '12.
Mike Chambers, boss at the UK firm, said in a director's report accompanying the results that he was "satisfied" with the numbers and the balance sheet proposition, and expects better profits next fiscal year.
The company was not available to comment further. ®