Iomart FY results seen at lower end of expectations

Cloud computing company Iomart expects to deliver a "continued stable financial performance" in the second half of the year ended 31 March despite the UK's third Covid-19 lockdown weighing on its full-year performance.

Iomart said on Wednesday that full-year results would be "at the lower end of expectations". However, the firm noted that it remained "strongly profitable" and said it was confident it had "a strong basis for growth" once UK business confidence returns and strategic actions currently in progress under new chief executive Reece Donovan had been fully implemented.

The AIM-listed group expects to report revenues of approximately £112.0m, broadly flat year-on-year when compared to 2020's £112.6m, while adjusted underlying earnings of roughly £41.5m were down £2.0m year-on-year and adjusted pre-tax profits of around £20.0m was down from last year's £22.8m print.

Iomart added it had seen revenue growth within its core area of managed cloud services, but noted that overall, the cloud services division experienced a contraction, primarily due to a drop in non-recurring hardware reselling activities as customers delayed investment decisions.

While Iomart acknowledged that it had ended the year with a lower adjusted EBITDA margin of approximately 37.1%, it stated its margin level still remained higher than the industry average and "consistent with expectations".

Chief executive Reece Donovan said: "Iomart has performed resiliently during these unprecedented times, proving the strength of our recurring revenue model, the value our customers place on the services we deliver, and the commitment of our teams. We are in a period of transition for Iomart, building on a strong starting position in terms of our financial strength, business model and market position. "

As of 0945 BST, Iomart shares were down 2.44% at 313.65p.