Shares in iomart Group (AIM:IOM) fell 16% to 15.11p after the cloud services provider reported a sharp decline in profitability and warned that revenue is expected to fall in the 2027 financial year.
The AIM-listed company posted revenue of £154.9 million for the year to 31 March, up 8% from £143.5 million, helped by a full-year contribution from its Atech acquisition.
However, adjusted EBITDA fell 25% to £25.6 million, while adjusted EBIT dropped to £5.2 million from £12.8 million. The group swung to an adjusted pre-tax loss of £4 million from a profit of £6.5 million a year earlier.
Organic revenue declined during the year as customer churn outweighed new business wins, particularly in private cloud managed services and Microsoft-related offerings.
Gross order bookings totalled £20.6 million of annual recurring revenue, but this was offset by customer churn worth £21.2 million.
Executive chair Richard Last said: "The financial results reflect the ongoing transition away from legacy technologies, with churn, particularly elevated in the final quarter, weighing on near-term performance."
Net debt increased to £108.6 million from £101.9 million, although the company said cash generation remained strong and it had extended its £115 million revolving credit facility until June 2028.
The board expects a modest decline in revenue in the current year, although it anticipates cost savings and a greater focus on higher-value services will support improved profitability in the second half.
