Glasgow cloud computing firm Iomart flags record sales despite £7m energy bill spike

Iomart, the Glasgow-headquartered cloud computing group, has flagged record annual revenues of £115 million and “positive momentum” heading into the new financial year despite a spike in energy costs.

Bosses noted that the data-centre sector as a whole has had to navigate “significant challenges” in energy markets and during the year the group’s electricity costs increased by some £7m. The firm’s “robust business model” and customer arrangements have ensured this additional energy cost has been “appropriately passed through to the customer base”, they added.

In a trading update ahead of publishing its results for the year to the end of March, the group flagged revenues of about £115m, which would be a record figure and higher than the £103m generated a year earlier. Adjusted underlying earnings are expected to top £36.2m, down slightly on the £38m reported a year earlier, while adjusted profit before tax is likely to come in at £14.6m, compared with £17.1m the year before.

The firm said it had seen “stability of customer renewal rates across all areas of the business”, providing a solid base of recurring revenues. Meanwhile, the sales pipeline improvement noted in the first half converted into stronger order booking levels in the closing months of the year, providing positive momentum as the group enters the new financial period. Iomart noted that its earnings margin in the year had been “heavily impacted” by the pass through of energy costs and to a lesser extent lower margin within its Concepta acquisition, primarily from the latter’s reselling activities.

Chief executive Reece Donovan said: “I am pleased with the progress achieved this year in our transition to a secure hybrid cloud offering. We saw our pipeline improve in the first half and this converted to stronger order booking levels as we completed the year. The team has worked hard to ensure momentum in the execution of our strategic plan and continuous improvement within the business. This gives us confidence that we will continue to be successful within the wider growing cloud sector.”

Shore Capital analyst Martin O’Sullivan noted: “We welcome today’s update as a significant incremental positive.”