Hosting company, iomart, has closed a strong and busy FY13 (to the end March 2013). The company grew topline revenue by 29% to £43m, buoyed partly by several acquisitions (Melbourne Service Hosting Ltd, Internet Engineering Ltd and Skymarket Ltd) but also by strong underlying growth. The company reports in two service lines: Hosting and its Easyspace web hosting business. The former accounted for £32m of total revenues and saw organic growth of 20%. Adjusted EBITDA (i.e. before share based payment charges and acquisition costs) increased 48% to £16.5m.
There is no question that the UK market for hosting services (in the various flavours in which it comes) is set for continued growth. iomart plays in the small and mid-sized markets, where it typically provides services to firms whose core business involves internet transactions. For example, travel site Skyscanner, the ticketing systems for Stagecoach, and Guardian Media’s jobs site. Angus MacSween, CEO, describes the company’s model as being “very clean” - by which he means that every pound of revenue is from services delivered out of iomart’s own data centre space. Of the 15,000 servers the company manages, not a single one resides on a customer site.
Acquisitions are playing a key role for many of the hosting firms that operate in the fragmented mid-market (e.g. Pulsant acquires ScoLocate, Acquisition number 11 for 6 Degrees). For iomart, the objective is to acquire the customer base, rather than the capabilities/IPR. Its strategy of organic growth alongside acquisitive growth will continue. Indeed, by applying this approach the company intends to be twice the size within five years. At this rate, we might not even have to wait five years!
- Subscribers to our InfrastructureViews research stream can read more about the UK mid-market managed hosting scene in forthcoming research due out later in the summer.