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UK cloud services provider Iomart Group has reported revenues of £143.5m for the year ended 31 March 2025, up 13% yoy, though this growth was entirely driven by the acquisition of Atech. Organic revenues actually declined 7% as the company grappled with legacy customer losses, with significant churn outweighing new customer wins. Iomart's share price is down c.10% so far this morning, and now down c.80% over the past year.
I caught up this morning with Richard Last, Executive Chair and Scott Cunningham, CFO, who highlighted that it has been a “challenging year for the firm and some of those challenges will continue” but that there are also plenty of opportunities for growth as well. Last took over from former CEO Lucy Dimes who left the business in May (See - Times up for Dimes and iomart), but he was keen to stress it is a temporary appointment, with the search for a new CEO to begin very shortly.
The big hit to the share price this morning can possibly be attributed to the news that adjusted EBITDA fell 9% to £34.3m, whilst adjusted profit before tax was down 57% to £6.5m. The company attributed the profit decline to significant churn in self-managed infrastructure services, which saw revenues drop 17% organically, and disruption from Broadcom's VMware partner programme changes, which cost the business £1.4m. As the business has sought to reposition its product mix, the legacy dedicated server business has weighed on profitability. The group has initiated a cost reduction programme targeting £4m in annualised savings, with 40% already implemented in Q1 FY26. This includes a review of the group’s data centre footprint and the expansion of its Indian offshoring operations.
The £57m acquisition of Atech in October 2024 is seen as a key turning point for the business (See - iomart makes game-changing Atech acquisition), contributing £21.5m in revenue during its first six months under Iomart ownership. The business will be retaining the Atech, iomart and Easyspace brands, which it feels still hold strong value. A new sales structure has been put in place to unify its go-to-market to maximise upsell across its propositions, whilst multiple legacy brands have been consolidated under the “Iomart” business unit. Whilst Atech’s revenue contribution is modest, it is the opportunities it brings that Last and Cunningham were keen to highlight. Atech brings expertise, accreditation and importantly credibility in both public cloud and cybersecurity, with both seen as strong opportunities for upsell across iomarts existing customer base. Atech has continued to accelerate post-acquisition, with revenue growing 27% yoy to reach £40m on an annualised basis.
Iomart's focus for FY26 will be to improve the operating efficiency of the group, addressing customer churn, reducing debt and seeking to increase sales momentum in high-growth service areas like public cloud and security. There is no specific industry focus for the business at present, however Last highlighted there has been a stronger focus on being more proactive with customers and has identified its Top 200 customers to target with iomart's newly acquired capabilities. There are a lot of positives to take away from the recent reorganistion and the Atech acquisition, the next year will however continue to be one of change, but there is a clear strategy of what the business wants to achieve.
Posted by: Simon Baxter at 10:16