Originally reported by The Scotsman. Trading update sourced from Iomart’s investor announcement, April 2020.
Iomart Sees Minimal COVID-19 Impact as Cloud Demand Holds Steady
Glasgow-based cloud computing and managed hosting company Iomart reported in early April 2020 that it had experienced “minimal change” to its business levels despite the disruption caused by the COVID-19 pandemic. In a trading update to investors, the company expressed confidence in its business model and outlined expectations for continued revenue growth, strong profitability, and solid cash generation.
Financial Year Results: March 2020
With a financial year ending 31 March 2020, Iomart said the timing meant the company experienced only limited exposure to the early effects of COVID-19. For the year to 31 March 2020, the company expected to report:
- Revenue: approximately £112 million, up from £103.7 million the prior year
- Adjusted underlying earnings (EBITDA): approximately £43 million, compared with £42.2 million previously
- Adjusted profit before tax: approximately £22.5 million, down slightly from £25.5 million
- Adjusted operating profit margin: approximately 22%, down from 25.7%, attributed to a change in revenue mix and increased investment in sales
Despite the margin compression, Iomart noted that its operating profit margin remained above the industry average — though no specific benchmark figure was provided in the announcement.
Why Iomart Saw Limited Disruption
Iomart’s relative insulation from the immediate economic shock came down to a few structural strengths of its business model:
- Diversified customer base: The company stated it was not significantly exposed to the industries most severely impacted by COVID-19 lockdowns.
- Online-first customers: The vast majority of Iomart’s customers operate online and were, if anything, expected to see increased demand for their own products and services during the pandemic — in turn supporting demand for Iomart’s hosting and cloud infrastructure.
- High recurring revenue: Cloud and managed hosting contracts typically generate predictable, subscription-style income, providing stability during economic uncertainty.
- Strong balance sheet and cash generation: The company’s cash position and cash flow profile gave it the ability to weather a period of uncertainty without immediate stress on operations.
The Cloud as a Pandemic-Era Accelerant
In its investor update, Iomart acknowledged broader uncertainty about how the remainder of calendar 2020 would unfold. The company noted that some IT investment decisions were likely to be delayed in the short term. However, it also highlighted the longer-term structural tailwind:
“While uncertainty exists over how calendar 2020 will unfold, with some IT investment decisions likely to be delayed in the short-term, it is clear that technology and the cloud will not lose relevance and indeed the situation we are all facing perhaps reinforces the journey to the cloud.”
— Iomart trading update, April 2020
This reflected a view widely held in the managed services and cloud infrastructure sector during 2020: that the forced shift to remote work, digital commerce, and online services would accelerate enterprise cloud adoption rather than stall it.
CEO Statement: Stability and Staff Welfare
Chief Executive Angus MacSween emphasised both the operational resilience of the business and the human dimension of managing through the crisis:
“At this time, our priority is to see our staff and all our customers through this emergency situation as unscathed as possible. I am proud of how the team have responded and how well our business continuity has functioned. While we may potentially see an impact on our customer base and trading in the coming months, overall the group benefits from high levels of recurring revenue, strong levels of cash generation, a strong balance sheet and a wide and large customer base.”
— Angus MacSween, CEO, Iomart
Outlook and Ongoing Monitoring
Iomart stated it would continue to monitor the evolving situation and committed to providing a further trading update alongside its audited financial results. The company was candid that the eventual impact on its customer base remained uncertain at the time of the announcement — an honest position given the pace at which the pandemic was unfolding in late March and early April 2020.
For DevOps and infrastructure teams evaluating cloud providers, Iomart’s trading update underlined a broader lesson from the pandemic period: managed cloud and hosting businesses with diversified, online-native customer bases and high recurring revenue were structurally better positioned to absorb demand shocks than providers heavily reliant on on-premises hardware sales or single-vertical customer concentration.
About Iomart
Iomart is a Glasgow-based cloud computing, managed hosting, and connectivity company listed on the AIM market of the London Stock Exchange. It provides infrastructure-as-a-service, managed security, connectivity, and cloud solutions primarily to UK businesses.