Iomart’s FY2026 Results: Transition Year Delivers Strategic Reshaping Amid Revenue Decline and Elevated Churn

Iomart FY2026 results analysis – revenue up, but the underlying picture is tougher

Iomart’s FY2026 results are a proper mixed bag. On the surface, revenue rose 8% to £154.9 million, which looks decent enough. But dig a layer deeper and the business actually went backwards organically, with profitability dropping sharply and customer churn running ahead of new bookings.

My take: this was not a growth year, it was a repair year. Management is trying to reshape the business around higher-value cloud, security and Microsoft services, but that transition is costing money and the old revenue streams are fading faster than the new ones are filling the gap.

Iomart FY2026 key numbers retail investors need to know

Metric	FY2026	FY2025
Revenue	£154.9 million	£143.5 million
Recurring revenue percentage	86%	89%
Adjusted EBITDA	£25.6 million	£34.3 million
Adjusted EBIT	£5.2 million	£12.8 million
Adjusted loss before tax	£4.0 million	£6.5 million profit
Statutory loss before tax	£13.6 million	£53.2 million
Cash flow from operations	£21.9 million	£27.2 million
Net debt	£108.6 million	£101.9 million

Iomart revenue growth was driven by Atech, while the core business shrank

The biggest thing to understand here is that reported growth came from the full-year contribution of Atech. Without that boost, the business went the other way. Iomart says organic revenue declined by approximately £9.7 million, or 8%.

That matters because it shows the core engine is still spluttering. Iomart Cloud Services revenue fell to £89.6 million from £97.1 million, with cloud managed services down 8% and self-managed infrastructure down 18%.

Atech did what it was supposed to do in headline terms, delivering £50.1 million of revenue versus £30.2 million last year. But even there, the second half weakened due to customer reductions and pressure in Microsoft 365 renewals.

Iomart customer churn was worse than bookings – and that is the central problem

This is the number I would focus on most. Gross order bookings were £20.6 million of ARR, which means annual recurring revenue contracted from new wins, renewals and expansions. That sounds fine until you see churn – lost recurring revenue from cancellations, non-renewals and contract cuts – came in at £21.2 million.

In simple terms, Iomart lost slightly more recurring revenue than it won. That is why revenue quality weakened, with recurring revenue slipping to 86% from 89%.

The pain was especially sharp in the final quarter, where churn reached £8.4 million. Management says this was mainly in Microsoft Modern Work offerings, where pricing competition is intense, and from the last legacy back-up platform customers disappearing.

That last bit is important. Some churn is strategic because Iomart is moving away from older products. Fair enough. But some of it is clearly competitive pressure, and that is less comfortable.

Iomart margins and profits fell hard despite £4 million cost savings

Adjusted EBITDA – a common measure of underlying operating profit before depreciation, amortisation, interest and tax – dropped to £25.6 million from £34.3 million. The adjusted EBITDA margin fell to 16.5% from 23.9%.

That is a hefty decline, and it tells you the business mix is changing in a less profitable direction for now. Microsoft-related services are strategically important, but they carry lower margins than some of Iomart’s older hosting and back-up revenues.

Adjusted EBIT came in at £5.2 million, down from £12.8 million, while adjusted loss before tax was £4.0 million compared with a £6.5 million profit last year. Finance costs also rose to £9.2 million from £6.4 million, reflecting a full year of Atech acquisition debt.

There was one crumb of comfort. Adjusted EBIT margin improved to 3.9% in the second half from 2.8% in the first half. That is progress, but let’s not get carried away – it is progress from a low base.

Iomart cash flow stayed solid, but net debt and leverage remain elevated

If there is a genuine bright spot, it is cash generation. Cash flow from operations was £21.9 million, and the adjusted EBITDA to operating cash flow conversion ratio was 96%. That is strong and shows the recurring revenue model still has some muscle.

But the balance sheet is where the market will keep a close eye. Net debt rose to £108.6 million from £101.9 million, or £88.6 million excluding lease liabilities. The company says net debt was 4.2 times adjusted EBITDA, which is high for comfort.

Management knows it too. The board explicitly said leverage is elevated and that deleveraging is a priority. It also extended the £115 million revolving credit facility to 30 June 2028, with covenants amended to reflect current leverage levels and plans.

That refinancing helps. It removes near-term pressure. But it does not remove the need to improve profits.

Iomart strategic reshaping – sensible plan, but execution now matters more than PowerPoint

The company has spent the year changing shape. Extrinsica has been integrated into Atech, all Microsoft delivery has been brought under one practice, the India operation has expanded to 89 staff, and Data Centre Infrastructure has been set up as a separate trading entity in FY27.

On paper, that all makes sense. It should improve accountability, transparency and operational focus. The group also says it achieved its £4 million annualised cost savings target, with a second phase of cost optimisation now underway.

Still, investors have heard plenty about structure and strategy. The next step is showing that these changes reduce churn, support margins and rebuild growth. Otherwise, it is just organisational housekeeping dressed up as transformation.

Iomart FY2027 outlook – modest revenue decline expected, profit recovery pushed into the second half

The outlook is cautious. The board expects a modest decline in full-year revenue in FY27, with a softer first half and better second half. In other words, investors should not expect a quick fix.

There is, however, a potential catalyst. Iomart thinks the Broadcom VMware licensing transition to April 2027 could create a significant sales opportunity, and it says its Pinnacle Partner status and VMware Cloud Foundation platform leave it well positioned.

That could help, especially in private cloud infrastructure where customers are being forced to rethink suppliers. But pipeline is not revenue, and revenue is not profit. Investors should wait for evidence of conversion.

What these Iomart final results mean for retail investors

• Positive: strong cash generation, no goodwill impairment this year, banking facility extended, cost savings delivered, and some second-half margin improvement.
• Negative: organic decline, churn above bookings, lower margins, higher finance costs and elevated debt.
• Big question: can Iomart grow its higher-value services fast enough to replace the legacy revenue rolling off?

My verdict on Iomart shares after the FY2026 results

This RNS reads like a company in the messy middle of a turnaround. Not broken, but not fixed either. The operational logic is understandable, yet the numbers show the transition is still painful.

For retail investors, this probably remains a show-me story. If churn eases, margins recover and debt starts to come down, sentiment could improve. Until then, Iomart looks like a business with decent assets and solid cash flow, but one that still has to prove its reshaping can translate into better shareholder returns.