Glasgow cloud computing firm Iomart upbeat despite lockdown 'hindering green shoots of growth'

Iomart, the Glasgow-headquartered cloud computing group, has flagged further acquisitions but said the current lockdown had “hindered the green shoots of growth” it had expected in the second half of its financial year.

In a trading update to investors, the group said its strong balance sheet allowed the “proactive consideration of acquisitions” to broaden its skills and capabilities in new areas.

It noted that its revenue stream continued to transition away from self-managed infrastructure to managed cloud revenue.

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For the year just finished, to the end of March, Iomart expects to report revenue of about £112 million, marginally down on the £112.6m generated a year earlier. Adjusted profit before tax is likely to be about £20m, compared with £22.8m in the previous 12 months.

CEO Reece Donovan: 'Iomart has performed resiliently during these unprecedented times' Picture: Peter Devlin
CEO Reece Donovan: 'Iomart has performed resiliently during these unprecedented times' Picture: Peter Devlin

The firm told investors: “Iomart expects to deliver a continued stable financial performance in the second half of the year.

“The third, and unexpected, Covid-19 UK lockdown hindered the green shoots of growth we had expected in the second half of the year, causing results to be at the lower end of expectations.

“However, the group remains strongly profitable, and the board is confident Iomart has a strong basis for growth once UK business confidence returns and the strategic actions currently in progress under new CEO Reece Donovan have been fully implemented.”

The firm pointed to revenue growth within its core area of managed cloud services, but overall the cloud services division experienced a contraction, primarily due to a drop in non-recurring hardware reselling activities as customers delayed investment decisions.

However, it has maintained its sales team throughout the pandemic in order to “position the company optimally once business confidence returns” and has not made use of any government furlough support.

Donovan, who took the reins from long-serving chief executive Angus MacSween, said: “Iomart has performed resiliently during these unprecedented times, proving the strength of our recurring revenue model, the value our customers place on the services we deliver, and the commitment of our teams.

“We are in a period of transition for Iomart, building on a strong starting position in terms of our financial strength, business model and market position.

“We look forward to updating investors further on our revitalised strategy at the capital markets day in May. We have high confidence levels on the future success of Iomart and our ability to be a leading cloud service provider, supporting customers in each step of their cloud journey.”

Last month, the firm said it had made a seven-figure investment in “next generation” technology that will allow its customers to benefit from faster connections.

The major network expansion has seen the firm invest nearly £2m in core routing technology from Cisco. It will provide 100GB capacity on its network with the ability to scale to 400GB.

The group said the latest investment followed a “noticeable increase generally in internet traffic due to Covid-19”. Iomart is also increasing resiliency for customers in its key data centres with the addition of extra fibre routes.

In January, it emerged that Iomart was supporting a technology transformation for the National Lottery Community Fund, enabling hundreds of staff to deliver vital financial support during the pandemic.

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