Iomart, the Glasgow-headquartered cloud computing group, has warned investors to expect profits at the lower end of expectations despite rising revenues.

In a trading update ahead of its interim results, due in early December, the firm pointed to strong cash conversion, improved customer renewal levels and continued momentum across all strategic areas.

Bosses noted that the recent volatility in energy markets had presented “challenges” for the sector, but said the company’s “robust business model” and customer arrangements have ensured that additional energy costs have been “appropriately passed through to our customer base”.

For the six months to the end of September, the group expects to report revenue in the region of £52.5 million, which would be up from £51.9m a year earlier, adjusted underlying earnings of about £17.8m, down from £19.6m, and adjusted profit before tax of approximately £7.3m, against £9.1m the year before.

The mix of the business continues to be focused on recurring cloud managed services revenue, which is in line with management expectations. Non-recurring revenue from hardware and software reselling activity has not yet recovered, Iomart noted.

The firm told investors: “As we see increases in energy costs in the market, we have demonstrated that our business model and customer arrangements allow us to flex pricing. We continue to monitor the inflationary environment very closely and will seek to respond accordingly.

“Revenue and profit in the second half of the year are expected to be higher than the first half, however, in the face of potential economic headwinds, it is not expected that margins will fully recover and that profit for the full year is therefore likely to be at the lower end of the board’s original expectations.”

Chief executive

Glasgow cloud computing firm Iomart cautions on profit amid energy squeeze