iomart Group plc (AIM: IOM), the secure cloud services company, provides a trading update for the year ending 31 March 2025.

The acquisition of Atech on 1 October 2024 marked a significant milestone in the Group’s ambition to be the leading secure cloud services provider in the UK, strengthening our Microsoft credentials, managed security services and global delivery capabilities. Since completion, trading at Atech has been strong, at both the revenue and profit level, and aligned with our expectations at the time of the acquisition. Atech is also contributing positively to our Group’s objective to pivot our product portfolio and capabilities into the faster growing areas of the cloud sector.

Within the existing core iomart business, order bookings remain strong, demonstrating that strategic investments in the product portfolio and go-to-market approach are delivering results. However, recent trading has seen an acceleration in customer churn in the self-managed infrastructure base, which includes a long tail of smaller customers, along with lower renewal levels in private cloud managed services. Given the fixed cost nature of our data centers and network infrastructure, these faster than anticipated shifts in revenue have an amplified impact on profit contribution.

With growth in newer offerings offsetting legacy business declines, the Board continues to anticipate revenue for the year ending 31 March 2025 to be broadly in line with market expectations. However, the accelerated shift in revenue mix towards higher growth, lower margin services results in the Board now expecting adjusted EBITDA at approximately 10% below current market expectations. The Group’s depreciation, amortisation and interest charges are predictable, meaning these impacts will similarly flow through to Adjusted EBIT and Adjusted PBT. The Board expects net debt levels at 31 March 2025 to broadly align with current market expectations.

Our “bigger, better, bolder” strategy and the Atech acquisition is focused on pivoting the business toward higher growth segments, which will establish a more resilient and scalable foundation for the future. This strategic realignment is designed to drive long-term value creation, and we are actively seeking to optimise our infrastructure fixed cost base to reflect our changing revenue profile.

The Board remains committed to delivering sustainable, long-term growth and is taking decisive action to position the business for future success.

Lucy Dimes, CEO of iomart Group plc, commented:

“We have seen continued positive new order bookings across both the iomart and Atech offerings and are starting to see the power of the combined business flow through. However, transformation takes time, and churn within legacy offerings continues to present a headwind. We will continue to optimise our cost structure, while pivoting the portfolio to higher growth segments, and are confident that we have the right team and offerings to achieve our bold ambitions.”

Note: Company compiled range is based on known sell-side analyst estimates. The latest known sell-side analyst estimates for the full year ended 31 March 2025 are:

• Revenue in the range of £142m to £143m;
• Adjusted EBITDA* in the range of £37.0m to £38.0m; and
• Adjusted PBT** in the range of £10.1m to £10.8m
• Net Debt in the range of £95m to £98m

*adjusted EBITDA means earnings before interest, tax, depreciation, amortisation, share based payment charges, gains or losses on revaluation of contingent consideration, acquisition related costs and non-recurring items.

**adjusted profit before tax means profits before, tax, share based payment charges, amortisation of acquired intangibles, gains or losses on revaluation of contingent consideration, acquisition related costs and non-recurring items.