iomart’s CFO to depart and trading softens: what today’s RNS really says
iomart has dropped a double-header: a planned CFO exit and a trading update that points to softer performance through the winter months. The short version is this: revenue should land broadly in line with market expectations for the year to 31 March 2026, but EBITDA is now expected to come in just below the lower end of expectations. Customer churn ticked up in high-margin areas, while growth continued in Azure, security and Microsoft 365, which carry lower margins.
There’s also some belt-tightening progress: over £5.0m of annualised cost savings have been achieved, with more efficiency opportunities being pursued. Cash discipline remains strong and the Group is operating within its bank facilities.
CFO transition: Scott Cunningham to leave after year-end reporting
Chief Financial Officer Scott Cunningham has told the Board he will step down to take a role in a private company outside IT. He will stay through the March year-end reporting cycle and is expected to leave the Board and the Company in June 2026. The search for a successor starts immediately.
Seven years in the seat is a decent stint, and the planned, post-year-end timing plus an overlap with the Executive Chair suggests a controlled handover rather than a dash for the exit. Still, investors tend to mark CFO changes as a governance watchpoint until a well-credentialed replacement is named.
Trading update: churn bites, mix shifts to lower-margin growth
Management flags a soft December and January, with increased customer churn (customers leaving or scaling back) in certain high-margin areas. At the same time, iomart is growing in Azure, security and Microsoft 365. Those are healthy demand signals, but margins in these areas are traditionally lower, so the mix shift dilutes profitability even if revenue holds up.
On the positive side, net order bookings are expected to be positive for the year and the sales pipeline is described as encouraging. That tells us demand hasn’t disappeared – it’s the margin profile and churn that need attention.
FY2026 outlook vs market expectations: revenue in line, EBITDA below low end
The Board now expects:
- Group revenue to be broadly in line with current market expectations.
- EBITDA to be just below the lower end of current market expectations.
iomart also notes that cash performance and capital expenditure (capex) discipline remain strong, and the Group is operating within its existing bank facilities.
For context, the Company has compiled the latest known sell-side analyst estimates for FY26 as follows:
- Revenue: £157.6m to £159.1m
- Adjusted EBITDA: £27.7m to £28.5m
- Adjusted loss before tax: £(2.1)m to £(1.0)m
- Net debt: £98m to £107m
Given today’s guidance, revenue should track near that £157.6m-£159.1m range, while EBITDA is now seen just below £27.7m. The Company has not provided updated guidance on adjusted loss before tax or net debt beyond referencing market estimates and stating that cash performance and capex discipline remain strong.
Cost optimisation: over £5.0m annualised savings and more to come
iomart has banked annualised savings of over £5.0m and is pursuing further efficiency opportunities aimed at profit, operational efficiency and service quality. That is helpful in a year when mix and churn are pinching margins. Bear in mind “annualised” means the full benefit lands over a 12-month period, so not all of it may be reflected in the FY26 outturn depending on timing.
Why this matters: the good, the bad and the watchpoints
- Margin pressure is the headline negative. Higher churn in high-margin lines plus growth in lower-margin services drives the EBITDA miss. That mix needs rebalancing or offsetting with pricing and efficiencies.
- Revenue resilience is a constructive sign. Positive net order bookings and an encouraging pipeline point to demand that can be converted – but the margin of that demand matters.
- Execution on efficiencies is a tangible positive. Over £5.0m of annualised savings is meaningful, particularly if churn stabilises and new wins scale.
- CFO change introduces uncertainty. The handover looks orderly, but investors will want a timely appointment with strong sector and transformation credentials.
- Balance sheet discipline continues. Operating within bank facilities and emphasising cash and capex discipline is reassuring given market estimates put net debt in the £98m-£107m range. The Company has not provided updated net debt guidance today.
Key numbers and definitions from the RNS
| Item | Figure / Guidance | Comment |
|---|---|---|
| Revenue (FY26 market range) | £157.6m – £159.1m | Company expects “broadly in line” |
| Adjusted EBITDA (FY26 market range) | £27.7m – £28.5m | Company expects “just below” the lower end |
| Adjusted loss before tax (FY26 market range) | £(2.1)m – £(1.0)m | Company did not update this today |
| Net debt (FY26 market range) | £98m – £107m | Operating within current bank facilities |
| Cost savings (annualised) | Over £5.0m | Further opportunities being pursued |
| CFO departure timing | Expected June 2026 | After completion of March year-end reporting |
Quick jargon buster
- Churn: the rate at which customers leave or reduce spend. Higher churn hurts growth and margins.
- EBITDA: earnings before interest, tax, depreciation and amortisation. A cash-profit proxy. Here it’s “adjusted” to exclude items like share-based payments, acquisition costs and non-recurring items.
- Pipeline: qualified prospective deals that could convert into orders.
- Net order bookings: the net increase in contracted business during the period.
- Net debt: total borrowings minus cash.
What I’ll be watching next
- Churn stabilisation in high-margin lines. If churn normalises, the EBITDA drag eases quickly.
- Mix improvement and pricing. Can iomart attach higher-margin managed services to Azure and Microsoft 365 growth to lift profitability?
- Conversion of the “encouraging” pipeline into higher-quality bookings in Q4 and early FY27.
- Further detail on cost actions and timing of benefits, especially into FY27.
- Appointment of a new CFO with relevant sector and transformation experience.
Bottom line
This update is a blend of resilience and realism. Revenue looks steady, but margin pressure and higher churn mean EBITDA will miss the low end of expectations. Cost savings and a positive bookings backdrop help, and cash discipline remains a comfort. The near-term task is clear: steady churn, sharpen margins and land a strong CFO successor to keep the transformation on track.
