AIM-listed hoster iomart confirmed strong growth in its interim results today. With profitability also going in the right direction, this mid-market hosting firm seems to have found a successful formula that encompasses both inorganic and organic growth.
iomart Group’s total revenues in the six months to September were up 36% year-on-year to £15.4m. EBIT was up 133% to £2.5m, which meant the EBIT margin climbed from 9% to 16%. iomart shares are unchanged in early trading this morning.
Most of iomart’s business is in the large SME/small corporate managed hosting space, where headline growth was 50%. This was helped by acquisitions, naturally, and growth in the coming periods will be further boosted by the recent addition of EQSN (see Iomart adds more tartan to the mix with EQSN) and Global Gold. iomart’s string-of-pearls acquisition strategy is also a key plank in its profit growth. The company is typically buying small hosting plays that rent data centre space and then migrating them to one of its own five DCs around the UK, thus eking out cost savings and profit. It’s clearly an approach that’s working, and Iomart will continue to acquire readily-digestible hosting firms, of that we can be sure.
Meanwhile iomart’s Easyspace operation, which caters to the micro and small SME crowd, managed 8% growth in the first half. Much of this was driven by the acquisition of Switch Media Group in April this year (see Iomart expands SME hosting business). Profitability at Easyspace improved, but clearly Iomart is finding it harder to grow in this hugely competitive and price sensitive part of the market than in the SME/small corporate space. Nonetheless, there will continue to be opportunities to sell services derived from iomart’s hosting business to the growing number of sub-50 seat businesses that need scalable, cost-effective, typically cloud-based hosting.
We’ll have further commentary on iomart for HotViewsExtra subscibers, once we’ve had a chance to digest this morning’s discussion with CEO Angus MacSween and FD Richard Logan.