Revenues up but Iomart warns on renewals

AIM-LISTED Iomart expects to deliver a 10% rise in revenues for the year to the end of March despite lower customer renewal rates that will dampen earnings growth.

The IT company – which employs about 150 of its 500 staff at its headquarters in Glasgow – said in a trading update that its cash generation has remained robust despite a challenging economic environment. The latter included lowerthan-expected customer renewal rates across a “long tail of smaller customers” following price increases to offset higher energy costs.

“I am pleased with the progress achieved in the year, with the increasing strength of our offering reflected in good order growth,” chief executive Lucy Dimes said. “Our resilient financial results, extensive customer base and deep technical expertise continue to provide a solid platform for enhanced revenue growth over the medium term, from extended product solutions, focused sales and marketing activity.”

Ms Dimes, chair of Iomart since 2022, stepped into the role of chief executive in September following the abrupt resignation of Reece Donovan. She said that she is intent on picking of the pace of the company’s expansion.

Revenues are expected to reach £127 million, compared to £115.6m the previous year. Adjusted earnings are projected to rise by 4% to roughly £37.5m with adjusted pre-tax profit reaching £15m, compared to £14.8m a year earlier.

The increase in profit was partially offset by higher interest expenses of £4.3m, compared to £2.9m in 2023. Year-end net debt is expected to come in at £43m, up from £39.8m primarily because of merger and acquisitionrelated cash payments totalling £15m.

“Our three most recent acquisitions have all added recurring revenue growth, and we see continued M&A activity as an important part of strengthening our capability and market growth plans,” Ms Dimes added. Shares closed yesterday’s trading 3.5p lower at 137p, a decline of 2.5%.