Increased customer churn saw Scottish cloud computing firm Iomart fall to a loss during a year of transition.
The Glasgow-based company, which has seen a number of executive changes in recent months, posted a rise in revenue to £154.9 million from £143.5m in the prior year, though recurring revenue decreased to 86% from 89%.
Adjusted EBITDA saw a significant decline to £25.6m from £34.3m, and adjusted EBIT fell to £5.2m from £12.8m, resulting in an adjusted loss before tax of £4m compared to a profit of £6.5m in the previous year.
Profitability improved in the second half of the year, with adjusted EBIT margin increasing to 3.9% compared with 2.8% in the first half.
While a modest decline in full year revenue is expected in the current year, the board expects the benefits of cost base actions and an increased focus on higher-value, strategically aligned services to support an improved profit profile during the second half of FY27.
Richard Last, executive chair, stated: “FY26 has been a year of transition and repositioning for Iomart. The group has taken decisive steps to redefine its operating model, enhance business unit accountability and position the business for sustainable long-term growth.
“I am pleased to report that we delivered on our £4m annualised cost savings target, resulting in a structurally leaner and more focused organisation.
“The financial results reflect the ongoing transition away from legacy technologies, with churn, particularly elevated in the final quarter, weighing on near-term performance.
“However, we have maintained strong cash generation, refreshed our banking facilities, and entered FY27 with a clearer strategic framework and more defined business unit structure to drive better performance and focus on distinct growth areas.
“Our focus for FY27 is clear, to rebuild growth momentum in higher-value cloud, security and data protection services, continue our cost optimisation programme, and leverage our strong VMware and Microsoft credentials as both markets undergo significant transition.”
Mr Last assumed his current role following the departure of Lucy Dimes as group CEO on 29 May last year and the company has appointed recruitment consultants to find a new CEO. He said the search will “commence in earnest once we have completed our strategic reshaping of the business”.
Craig MacKay, who joined Iomart in October 2023 andhas been serving as managing director of the Private Cloud and Datacentre businesses, has taken over as group chief operating officer.
Scott Cunningham, chief financial officer, will step down from his role to take up a new opportunity outside the IT sector and will leave the business at the end of this month. The process to appoint the successor CFO is “progressing positively”.
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