Glasgow-based secure cloud services firm Iomart Group plc said on Wednesday it expects to report revenue growth of 13% to £143 million for the year ended March 31, 2025.
In a pre-close trading statement for the year, Iomart said: “This growth includes contributions from acquisitions, including approximately £21 million from Atech and an estimated £4 million from the full-year impact of small acquisitions completed in FY24.
“Excluding acquisitions, the core business experienced a revenue decline of approximately £9 million or 7% year-on-year.
“As previously disclosed, this decline was driven by elevated churn levels among the group’s self-managed customer base and certain private cloud managed services.”
Iomart said adjusted profit before tax is expected to fall to £6.5 million from £15 million “reflecting the lower adjusted EBITDA alongside the increased adjusted depreciation & amortisation charge and interest expense in the year of approximately £21.4 million (FY24: £18.5m) and £6.4 million (FY24: £4.3 million), respectively.”
The Glasgow firm said depreciation and amortisation increased “due to a new £2.9m charge related to revised VMware licensing arrangements under Broadcom (comparable £1.5m recognised as Opex in FY24).”
In addition, a £500,000 effective interest charge “has been introduced due to the long-term nature of the Broadcom commitment.”
Iomart said adjusted EBITDA is expected to fall to £34.3 million from £37.7 million, including a strong six-month EBITDA contribution from Atech of £3 million.
The firm said: “Whilst the underlying cost base has remained broadly consistent during the year, previously disclosed cumulative customer losses in our more traditional service lines, such as dedicated servers and data centre services, have impacted overall profitability as they are reliant on largely fixed-cost infrastructure and have an inherently higher EBITDA margin given their more capital intensive nature.”
Iomart added: “Order bookings for recurring revenue activity in the year, excluding any Atech contribution, grew strongly, totaling approximately £20 million in annualised recurring revenue (FY24: £16.5 million proforma equivalent).
“Growth was led by Microsoft related solutions, with demand for the group’s core offerings in managed private cloud and back-up & data protection services providing a stable foundation. This performance indicates that the group’s strategic shift toward higher-growth cloud segments is progressing faster than expected and while this shift brings margin dilution, it is also building a more scalable, resilient revenue base that aligns with our long-term growth strategy.
“The group’s strategic shift toward higher growth cloud segments was further accelerated with the acquisition of Atech on 1 October 2024, marking a significant strategic milestone in iomart’s evolution into a leading secure cloud services provider in the UK. Atech has strengthened the group’s Microsoft and managed security services offerings and extended its global delivery capabilities.
“The group’s operating cash generation improved from the first half of the year and net debt at 31 March 2025 is expected to be approximately £102 million (31 March 2024: £42.3 million), reflecting M&A-related cash payments of approximately £57 million.
“This represents a proforma net debt leverage ratio of approximately 2.7 times (FY24: 1.1 times) or 2.3 times (excluding IFRS lease liabilities of approximately £18m).”
In its outlook, Iomart reported: “We see the upcoming financial year as an important transitional phase, during which we will continue to invest in aligning the business towards these higher-growth, scalable areas of the market, to realise our ambition of becoming the UK’s leading secure cloud services provider.
“As we continue this transformation, and in line with market trends, we anticipate overall revenue to further shift away from mature, higher margin, capital-intensive dedicated servers and data centre services, resulting in some further margin dilution at a similar level of the last 12 months.
“We are actively pursuing initiatives to optimise costs and margins, including reviewing our data centre estate, increasing operational efficiencies such as expanding capacity through our team in India, and investing in systems standardisation and automation, including AI, to lay the foundations for future efficient scalability.”
Iomart CEO Lucy Dimes said: “Our acquisition of Atech has been game changing, delivering a strong performance in its first six months, validating the valuation paid and enabling us to reposition the group as a scale hybrid cloud services provider with market leading managed security services and SOC capabilities.
“We have also made substantial progress on our integration programme, refreshed and streamlined our branding, transformed service deployment and assurance capability, strengthened our three global technology partnerships, and significantly increased sales order bookings.
“As we build our wider hybrid cloud capabilities to counter the declining but higher margin mature dedicated servers and data centre services business, we are taking proactive steps to streamline operations and address our fixed cost base at the same time as investing in our growth portfolios and markets, to lay the foundations for sustainable, long-term growth and value creation.”