Iomart reports steep drop in first-half profit

(Sharecast News) - Iomart reported a steep drop in profit for the first half of its financial year on Wednesday, as higher borrowing costs and reduced legacy revenues offset the contribution from its largest-ever acquisition, Atech. However, the cloud services provider said it expected performance to improve in the second half, adding that it remained on track to meet full-year market expectations.

For the six months ended 30 September, group revenue rose 25% to £77.7m, boosted by £21.7m from Atech, which was acquired in 2024.

Organic revenue fell by about £6m due to the customer churn flagged last year.

Adjusted EBITDA declined to £12.9m from £17m, reflecting a shift in mix and lower recurring income from older services.

The AIM-traded company posted an adjusted loss before tax of £2.5m, compared with a £4.3m profit a year earlier, while the statutory loss before tax widened to £6.5m from a £1m profit.

Net debt increased to £109.6m from £48.1m a year earlier and £101.9m at the March year-end, with £97.5m drawn against the group's £115m revolving credit facility.

Cash flow from operations fell to £8.4m from £11.1m.

Iomart pointed to operational improvements that it said underpin a more positive second-half outlook.

Customer renewal rates improved during the period, and net order bookings remained consistently positive.

Microsoft-linked services now account for around 30% of group revenue, up from 7% in the first half of 2024, as the acquisition of Atech accelerated the company's strategic shift into higher-growth segments of the cloud market.

Iomart also reported £4m in annualised cost savings that would benefit results in the remainder of the year, with further efficiency measures under way.

The board reiterated that full-year results should land within the current range of analyst expectations, including revenue of £159m to £160m and adjusted EBITDA of £27.7m to £29.2m for the year to March.

At 1304 GMT, shares in Iomart Group were down 6.2% at 24.2p.

Reporting by Josh White for Sharecast.com.