Revenue Increases Despite Ongoing Organic Headwinds
Iomart Group plc (LSE:IOM) reported revenue of £154.9 million for the year ended 31 March 2026, representing growth of 8% compared with the previous year.
The increase was largely driven by a full-year contribution from the Atech acquisition. However, underlying organic revenue declined as the business experienced customer churn and a greater mix of lower-margin Microsoft-related services.
Despite these challenges, management highlighted encouraging progress in reshaping the group’s service portfolio toward areas with stronger long-term growth and profitability potential.
Profitability Impacted by Business Transition
The company’s transition towards higher-value cloud and managed services weighed on short-term earnings performance.
Adjusted EBITDA declined to £25.6 million during the year, while Iomart reported an adjusted pre-tax loss of £4.0 million.
Management noted that profitability improved during the second half of the year as restructuring initiatives gained traction and operational efficiencies began to deliver benefits.
The group also maintained strong cash generation despite the weaker earnings performance.
Cost Savings and Operational Restructuring Progress
Iomart successfully delivered approximately £4 million of cost savings during the year as part of a broader programme aimed at improving efficiency and supporting future margin recovery.
Several strategic initiatives were completed, including the integration of Extrinsica into Atech, the continued expansion of the company’s operations in India and the separation of its data centre infrastructure activities into a standalone entity.
These measures form part of a wider transformation strategy designed to streamline operations and better align the business with evolving customer demand.
Focus Shifts to Higher-Margin Cloud and Security Services
Management continues to reposition Iomart towards higher-value offerings across cloud infrastructure, cyber security and data protection services.
The company believes its strong relationships with Microsoft and VMware position it well to benefit from changing customer requirements and evolving licensing structures in the cloud computing market.
Upcoming VMware licensing changes are expected to create new commercial opportunities, while Iomart’s established Microsoft expertise remains a key competitive advantage.
The group expects these trends to support improved margins and stronger growth prospects in FY27 and beyond.
Banking Facilities Extended to Support Growth Plans
Alongside its operational transformation, Iomart extended its banking facilities, providing additional financial flexibility as it executes its long-term strategy.
Management believes the company’s strong cash generation and improved financing position provide a solid foundation for future investment and business development.
The focus remains on driving organic growth, improving profitability and increasing exposure to higher-value recurring services.
Outlook Reflects Transformation Challenges and Long-Term Opportunities
Iomart’s outlook continues to be shaped by near-term financial pressures, including reduced profitability, increased leverage and weaker free cash flow generation.
However, management believes the strategic repositioning of the business creates opportunities for stronger long-term growth and margin expansion.
Technical indicators remain supportive, although recent share-price strength suggests the stock may be approaching overbought territory in the short term.
Valuation remains constrained by current earnings losses, while the absence of a meaningful earnings multiple limits traditional valuation comparisons.
More about Iomart Group
Iomart Group plc is a UK-based provider of secure cloud-managed services, delivering solutions across cloud infrastructure, modern workplace management and cyber security.
The company supports businesses seeking to modernise and simplify their IT environments while improving resilience, scalability and data protection. Leveraging strong Microsoft credentials and leading Broadcom VMware partnerships, Iomart provides hybrid cloud, managed security and data protection services to customers across the UK.
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