Iomart warns on profits amid 'higher than usual' customer churn

Cloud computing company Iomart warned on Friday that interim revenue and profits had slipped in the six months ended 30 September as the "slightly higher than usual" customer churn seen in the final months of the previous trading year continuing into the first half of the current one.

Iomart expects to report revenues of approximately £52.0m for the first half, down from £56.3m a year earlier, with adjusted underlying earnings dropping to £19.5m from £20.8m and adjusted pre-tax profits slipping to approximately £9.0m from £9.8m a year earlier.

While Iomart said the majority of its customer base had "remained stable", with recurring revenues in the period accounting for 93% of revenue, non-recurring revenues, principally hardware reselling and one-off consultancy activity, was £2.0m lower than the same period last year and the group does not expect this revenue to be recovered during the second half.

"As a consequence, the board anticipates results for the full year to 31 March 2022 being below current expectations," said Iomart.

Chief executive Reece Donovan said: "We are on track to achieve the key milestones of our strategic refresh which we laid out in May for delivery in FY22. Our team is energised behind a new brand and vision to attract and retain quality customers. Sales, operational and organisational improvements continue to be made which are vital to scale the business.

"We are starting to see early signs that the market is responding to our newly launched offerings. While these successes will take time to flow through into our financial results, they provide solid foundations to support future growth."

As of 1050 BST, Iomart shares had slumped 12.50% to 189.0p.