Iomart shares up amid £115m record revenue

Iomart CEO Reece Donovan

Shares of Glasgow-based cloud computing firm Iomart Group rose as much as 4% after it published a trading statement for the year ended March 31, 2023, saying it expects to report record revenue of £115 million.

“Iomart is pleased to report that it expects to deliver full-year financial results in line with market expectations,” said the Glasgow firm.

“The group has seen stability of customer renewal rates across all areas of the business, providing a solid base of recurring revenues.

“Meanwhile the sales pipeline improvement noted in H1 converted into stronger order booking levels in H2, providing positive momentum as the group enters the new financial year.

For the year ended 31 March 2023, the group expects to report revenue of approximately £115 million (FY22: £103.0 million), adjusted EBITDA of approximately £36.2 million (FY22: £38.0 million) and adjusted profit before tax of approximately £14.6 million (FY22: £17.1 million).

The revenue of £115 million is a record level for the group and is a combination of a return to long-term historic customer renewal levels, inflationary pricing adjustments, primarily for datacentre energy usage, plus the successful completion of the acquisition of Concepta Capital Limited in August 2022.

“Non-recurring revenue is expected to be approximately £9.2 million (FY22: £7.1 million) meaning recurring revenue remains high at 92% of total revenue (FY22: 93%).

The datacentre sector as a whole has had to navigate the significant challenges in the energy markets and during the year the group’s electricity costs increased by approximately £7 million.

“Iomart’s robust business model and customer arrangements have ensured this additional energy cost has been appropriately passed through to the customer base.

“The group’s adjusted EBITDA reflects both the revenue mix in the year together with investment in upskilling our employees’ capabilities, alongside appropriate wage increases and cost of living support.

“EBITDA margin in the year was heavily impacted by the pass through of energy costs and to a lesser extent lower margin within the Concepta acquisition, primarily from their reselling activities.

“The increase in the UK interest rates has pushed the group’s interest expense up by approximately £0.9m year on year.

The group’s cash generation continued to be strong, with the year-end net debt expected to be approximately £41 million (31 March 2022: £41.3 million). This represents a net debt to adjusted EBITDA ratio of 1.1 times (31 March 2022: 1.1 times).”

Iomart Group CEO Reece Donovan said: “I am pleased with the progress achieved this year in our transition to a secure hybrid cloud offering. 

“We saw our pipeline improve in the first half and this converted to stronger order booking levels as we completed the year.

“The team has worked hard to ensure momentum in the execution of our strategic plan and continuous improvement within the business.

“This gives us confidence that we will continue to be successful within the wider growing cloud sector.”