iomart (AIM: IOM), the cloud computing company, reports its consolidated half yearly results for the six months ended 30 September 2024 (H1 2025).

• The financial results announced today are in line with the pre-close trading update published on 1 October 2024, reflecting a challenging H1. The transformational acquisition of Atech post period end has materially strengthened iomart’s offerings, credentials and capabilities and the Board reiterates confidence in the Group’s FY25 outlook and future prospects.
• Positive momentum in order bookings continued, with order bookings in the half year at record levels, being around 30% ahead of H1 2024
• Revenue was constant half year on half year, having benefitted from £3.7m of revenue relating to prior year acquisitions, negated by a lower level of renewals and timing of order billings. The Atech acquisition, completed after the period end, strengthens our ability to improve the level of renewals and to increase new business wins
• New Broadcom license arrangement has resulted in a short-term negative impact of £0.7m on Adjusted EBIT (being £1.4m new intangible amortisation charge, net of the £0.7m previous opex cost). This, combined with changes in the revenue mix, also influenced by prior period acquisitions, and the relatively fixed infrastructure costs, had a notable impact on H1 profitability
• Cost optimisation programme mobilised, targeting over £1m of annualised gross cost benefits by end of FY25. Further synergies and efficiencies continuing to be identified
• Adjusted EBITDA conversion to cash ratio7 in the period of 68% (H1 2024: 90%), reflecting the timing of several large vendor payments. The equivalent EBITDA conversion ratio on a last 12 month basis was 87%, in line with the Group’s more typical levels
• Period-end net debt of £48.1m (H1 2024: £48.0m), increasing to £105.1m following the post period end acquisition of Atech, a comfortable net debt to proforma adjusted EBITDA ratio of 2.6 times. Excluding leases under IFRS 16, net debt following the Atech acquisition, would be £86.8m

STRATEGIC HIGHLIGHTS

Key achievements under our Bigger, Better, Bolder strategy:

• Streamlining of the internal operating model is progressing to plan, with all sales, product management, marketing and customer deployment/management under single leaders. This combined with operational excellence programmes has led to a significant uplift in delivery performance being achieved over the past 12 months. Cost efficiencies are also now materialising, some of which is being reinvested in additional customer success roles such as a new Technical Account Management team
• £57m acquisition of Atech Support Limited (“Atech”) completed which significantly widens and deepens our credentials, expertise and delivery capability across Microsoft Azure, Modern Workplace and Security and accelerates progress towards becoming the UK’s leading secure cloud services provider
• Significant strengthening of three Strategic Global Technology Partnerships, namely Microsoft, Broadcom VMware and Commvault, with joint go-to-market and innovation/R&D programmes being developed
• Strengthening of Board and governance independence completed with the appointment of Richard Last as Chair of the Board, with effect from 12 June 2024, bringing a wealth of experience in various roles in successful communications and technology companies

OUTLOOK

• With robust order bookings, enhanced customer service, a significantly improved product portfolio, and the successful execution of cost efficiency measures, we are well-positioned for a stronger second half but remains challenging for customer retention in our core business
• Atech integration progressing to plan with growth continuing post-acquisition, reinforcing confidence in both the value of the business and its value to the enlarged Group
• The growing demand for cloud computing and cyber security solutions, increasing complexity of the technical landscape, and need for a trusted and highly accredited partner with a strong delivery track record, give the Board confidence in the outlook for the medium-term prospects for the Group

Lucy Dimes, CEO commented,

“The Atech acquisition is a key step in delivering our Bigger, Better, Bolder strategy. The strength of the combined business, our order bookings momentum and the transformation and efficiency programmes we have put in place, mean we have entered the second half of the year in a considerably strengthened position.

Our enlarged Group and combined skills will allow us to compete more robustly with enhanced services, greater scale and references across the growth areas of our industry. Through the combined power of Atech and iomart, we now have the accreditations, credentials and capabilities to convert a greater proportion of our sales pipeline, as well as unlock increased cross-sale opportunities.

The growing demand for cloud computing and cyber security solutions, increasing complexity of the technical landscape, and accompanying need for a trusted and highly accredited partner with a strong delivery track record, give the Board confidence in the outlook for the Group and our ability to become the UK’s leading secure hybrid cloud provider.”

News in full

On behalf of CEO Lucy Dimes & Scott Cunningham, CFO of iomart Group (AIM: IOM), we are delighted to invite you to a webinar following the publication of the Group’s Interim Results

The session will be on: Friday 29th November @ 1pm

If you would like to join the session, please email nicholas.peters@fmp-ir.co.uk