Transition takes time
Iomart shares plummet after profits warning
Reece Donovan: ‘team is energised behind a new brand’
Shares in Glasgow-based cloud computing firm iomart Group plummeted after it issued a profits warning following a fall in some revenue streams.
In mid-day trade the shares were trading 34.2p or 15.83% lower at 181.5p.
It said it was just a few months into a refreshed strategy and the expected success of the transition of the business will take time to flow through into results.
“However the progress being made provides the board with confidence that the group will return to growth in the medium term,” it said in a trading update.
It said it had seen “slightly higher than usual customer churn seen in the final months of FY21” which continued into the first half of this current financial year.
Non-recurring revenue, principally hardware reselling and one-off consultancy activity was £2m lower than the equivalent period last year and it does not expect this revenue to be recovered during H2.
As a consequence, the board anticipates results for the full year to 31 March 2022 being below current expectations.
For the six months to 30 September 2021, the group expects to report revenue of approximately £52 million (H1 FY21: £56.3m), adjusted EBITDA of approximately £19.5m (H1 FY21: £20.8m) and adjusted profit before tax of approximately £9m (H1 FY21: £9.8m).
Profit margins have remained strong in the period, at 37% for adjusted EBITDA and 17% for adjusted PBT.
The group’s cash generation has been good and ahead of the board’s expectations.
Reece Donovan, CEO, 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.”