By Kristy Dorsey
Interim revenue and profits at cloud computing company iomart will be lower than previously expected following “slightly higher than usual” customer churn rates.
The Scottish firm said although the majority of its customer base remained stable, with recurring business accounting for 93 per cent of revenue, elevated levels of churn in final months of its last financial year had continued into the new accounting period. In addition, non-recurring revenue linked to hardware reselling and one-off consultancy was down by £2 million in the first half, and is not expected to be recovered in the final six months.
As a result, revenues for the six months to the end of September are forecast in the region of £52m, down from £56.3m in the same period a year earlier. Earnings are expected to slip to £19.5m, with adjusted profit before tax of approximately £9m, down from £9.8m previously.
READ MORE: Glasgow's iomart back in the hunt for acquisitions under new growth strategy
The profit warning triggered a near-18% fall in iomart’s share price, with the stock closing yesterday’s trading 38p lower at 178p. The company is due to publish its interim results in the first half of December.
The data centre and network infrastructure specialist has been re-positioning its offering under chief executive Reece Donovan, who took over from iomart founder Angus MacSween in October of last year. The AIM-listed company employs 150 of its 400 UK staff at its headquarters in Glasgow.
READ MORE: New broom at iomart looks to ‘tweaks’ for future growth
Despite the setback, Mr Donovan said iomart remains on track to achieve the key milestones of its refreshed strategy.
“Our team is energised behind a new brand and vision to attract and retain quality customers,” he said “Sales, operational and organisational improvements continue to be made which are vital to scale the business.
“We are starting to see early signs that the market is responding to our newly-launched offerings. While these successes will take time to flow through into our financial results, they provide solid foundations to support future growth.”
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