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CAPITALMARKETS DAYStrategic RefreshMay 2021
iomart.com
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1. Present iomart’s medium to long term strategy
2. Provide our view on the market opportunity for iomart
3. Outline strategic focus areas
4. Explain how we will support these from a brand and operations perspective
5. Outline the financial plan and KPIs
6. Meet the iomart team and provide an opportunity for Q&A
OBJECTIVES OF THE DAY
CAPITAL MARKETS DAY
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INTRODUCING THE LEADERSHIP TEAM
CAPITAL MARKETS DAY
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Content Person Role
Introduction Ian Steele Chairman
Strategic roadmap Reece Donovan CEO
Q&A Reece Donovan
Marketing Strategy Sharon Mars Leach CMO
Operational model and customer service Neil Christie COO
M&A re-fresh & evolving business model Scott Cunningham CFO
Q&A Reece Donovan
AGENDA
CMDCEO STRATEGIC ROADMAP
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In a year which will change many markets,responses will determine the winners
The Board’s strategy refresh process had input from across the business
We sought views of analysts and investors
Industry specific consultants helped us assess the speedand direction of our changing markets
We are very well placed - our infrastructure, customer baseand revenue model give us a great opportunity
Imperative to get the execution right
INTRODUCTION
CMDCEO STRATEGIC ROADMAP
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OVERVIEW OFIOMART
iomart.com
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SNAPSHOT OF THE BUSINESS
CMDCEO STRATEGIC ROADMAP
UK HEADQUARTERED PROVIDER OF CLOUD HOSTING AND MANAGED SERVICES
FOCUSED ON DIRECT SELLING TO THE UK MARKET AND UK HEADQUARTERED BUSINESSES IN THE SME SPACE
OVER 10,000 CUSTOMERS IN CLOUD SERVICES. OVER 70,000 CUSTOMERS IN EASYSPACE
400+ EMPLOYEES MAINLY IN THE UK WITH A SMALL TEAM IN THE US
13 DATACENTRES LOCATED ACROSS THE UK, LINKED BY 2000+ KMS OF PRIVATE NETWORK INFRASTRUCTURE, WITH OVER 25 POINTS OF PRESENCE GLOBALLY
£112M OF TURNOVER (FY21) WITHMARKET LEADING PROFITABILITY
FINANCIALLY RESILIENT, HIGH LEVELS OF RECURRING REVENUE, AND STRONG CASH GENERATION
20+ YEARS IN THE BUSINESS, 21 ACQUISITIONSIN THE LAST 10 YEARS, LISTED ON THEAIM MARKET OF THE LONDON STOCK EXCHANGE
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WHERE WE ARETODAY
iomart.com
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EVOLUTION SUMMARY TO-DATE
Phase 1Strong growth – 2007 to 2018
Market
Demand exceeding supply, limited competition
iomart
Good progress to £100m revenue, 40% margins
Successful mix of organic & inorganic growth
2007 – acquired core datacentre estate
Customer acquisition accelerated
Small acquisitions to bolster customers & assets
Strong focus on private cloud over colocation
Consulting and on-premise capabilities added
Mix of recurring & non-recurring revenue streams
9 datacentres and UK wide network in place
Phase 2Plateau – 2018 to 2021
Market
UK dedicated server market growth slows
Public cloud becomes widely accepted by SMEs
Covid-19 causes varied business disruption
iomart
Growth plateaued below 5%
Continue to generate good margins
Focus mainly on private cloud, including M&A
Sales team additional investment - yields two quick
Enterprise deals then stalls
Our ability to provide agile services is challenged
Phase 3April 2021 onwards
Build on our core
Align to the market
Invest in the growth areas
Improve service & skills
Focus on expertise
Be distinctive
CMDCEO STRATEGIC ROADMAP
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EXTERNAL MARKET REVIEW
CMDCEO STRATEGIC ROADMAP
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ASPIRATION
Exceed £200m+ revenue within 5 years
Be a leading secure hybrid cloud business - “iomart”
Be a trusted business & service partner for our customers
Expand our solution, service, skill and geographical reach
CMDCEO STRATEGIC ROADMAP
CONNECT, SECURE, SCALE
12CMDCEO STRATEGIC ROADMAP
Grow existing base and target Enterprise opportunities
Core Portfolio Organic Growth
New Services& Geographies
Acquisitions
Hybrid, Security, Digital Workplace (Unified Comms) & Connectivity
Expand customer base & skillsets inorganically
Run rate Revenue & EBITDA
Protect what we’ve got
STRATEGIC VALUE CREATION ROADMAP
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HYBRID CLOUD
CAGR20-24
16.6%
OPPORTUNITY
Hybrid cloud solutions allow customers to gain value from deploying capabilities
across a combination of on-premise, private and public clouds
WHAT IS IT? MARKET INSIGHTS
Public cloud adoption growing 100% public cloud not desirable Customers want options Avoid vendor lock-in Balance costs vs. flexibility Need to provide a path to public
OUR AMBITION WHAT WE NEED TO DO
To be a leading hybrid cloud managed services provider in the UK and beyond
servicing both SME and Enterprise customers
Target public cloud capabilities Expand our Microsoft skillsets Build out AWS skills Develop reference customers Partner in the short term for gaps Look for suitable acquisitions
Only Public Cloud
Hybrid
Only Private Cloud
CMDCEO STRATEGIC ROADMAP
£m
Source: Modelled from Synergy Research Group, December 2020
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SECURITY
CAGR20-24
9.7%
The provision of security services covering monitoring, event detection
and resolution in order to help customers protect their businesses from
cyber events
WHAT IS IT? MARKET INSIGHTS
Significant remote / hybrid working Rapid deployment of new solutions Increase in ransomware attacks Business ops cannot be impacted Security now a Boardroom issue Increase in security services demand
OUR AMBITION WHAT WE NEED TO DO
To be recognised within the security sector as an emerging leader in
delivering 24/7 security services with the unique benefit of fully-managed
remediation
Continue to sell our new service Build out additional capabilities Ensure robust 24x7 operations Acquire new skillset & customers Look for possible acquisitions
0.370.50
0.660.79
0.901.02
1.15
2018 2019 F 2020 F 2021 F 2022 F 2023 F 2024
CMDCEO STRATEGIC ROADMAP
OPPORTUNITY
£b
Source: IDC Research, Inc, November 2020
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CONNECTIVITY
Provision of bespoke networking between any UK location, utilising our
existing network alongside our partners and suppliers to deliver cost effective,
highly resilient & managed connectivity services for our clients
WHAT IS IT? MARKET INSIGHTS
Increase in remote / hybrid working Rural locations suffering Poor user experience using apps Interrupted video / voice calls Lack of connectivity resilience Limited monitoring & QoS
OUR AMBITION WHAT WE NEED TO DO
To extend our current capabilities in order to provide a one-stop shop (if
required) for our customers’ total connectivity needs
Limited investment required Heighten awareness of our offering Develop our partner relationships Bundle connectivity packages Engage customers having issues
CMDCEO STRATEGIC ROADMAP
CURRENT NETWORK
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DIGITAL WORKPLACE - UNIFIED COMMS
CAGR20-24
20%+
OPPORTUNITY
Provides the basis for organisations to bring together multiple legacy systems
into a single unified platform which enables their employees to communicate
with any device anywhere
WHAT IS IT? MARKET INSIGHTS
Small market but important Demand for hybrid working Desire for richer, more diverse
comms Need to simplify / consolidate
systems Screen interaction more common Remove need for desk phones
OUR AMBITION WHAT WE NEED TO DO
Digital Workplace - To be able to offer selected unified communications services to our customers. This is
currently a gap in the iomart portfolio.
Partner play Partner identified & engaged Build out options being worked First opportunities being pursued
IP PBXOn-Premise UC Applications
Pure and Hybrid Voice Comms
UCaaS (Applications)
UCaaS (Voice)
CMDCEO STRATEGIC ROADMAP
£m
Source: IDC Research, Inc, August 2020
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REINFORCING OUR VALUE PROPOSITION
CMDCEO STRATEGIC ROADMAP
Hybrid Cloud
Connectivity
Security
Unified Comms
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ORGANISATION, CULTURE & VALUES
Our people are at the heart of what we do
Align around our company values
Deliver on results – be ambitious
Embed learning into the way we work – be curious
Care for our people, society and the environment
One iomart
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STRATEGIC PILLARS
GROW
1. New enterprise customer wins
2. No of customers taking new services
3. Successful bolt on acquisitions
DELIVER
1. Customer satisfaction
2. Technical roadmap
3. Partner relationships
ENABLE
1. Consolidation of remaining sub-brands
2. Consolidation of legacy systems & tools
3. Continued ESG improvement
ONE IOMART TEAMpowered by a flexible, learning
and ambitious organisation
CMDCEO STRATEGIC ROADMAP
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WHAT HAS BEEN DONE, WHAT IS NEXT
FY21 FY22 FY23
Connectivity & Unified Communications Rollout
Hybrid Service Rollout
Security Maturation
Security Expansion
Sales, Operational and Organisational Improvements
Geographical ExpansionBrand Development
M&AStrategy Development
Transition & Close out FY21Hybrid Prep
ESG
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MARKETING STRATEGYSharon Mars-LeachCMO
iomart.com
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CREATING A BRAND STRATEGY
Why iomart exists and who we are
How iomart behaves and action we take
What iomart saysand how we say it
How we make our customers and people feel
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OUR APPROACH
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we make you unstoppable by enabling you to
connect, secure and scale anywhere, anytime.
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25CMDCMO - MARKETING STRATEGY
ACROSS THE CUSTOMER JOURNEY
Customer is passive / not actively looking for product or unaware they need a solution.
Represents majority of target market at any given time.
Customer is active / looking for product and researching options (why, what and how).
Represents minority of target market at any given time.
Customer is active / transacting with the business to purchase their chosen product or solution.
Represents minority of target market at any given time.
Customer is mainly passive / has purchased the product or solution and is using (or has used) it.
Represents minority of target market at any given time.
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BRAND LAUNCH TIMELINE
H1 (FYE22)
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OPERATIONAL MODEL AND CUSTOMER SERVICENeil ChristieCOO
iomart.com
28CMDCOO - OPERATIONAL MODEL AND CUSTOMER SERVICE
A STRONG FOUNDATION
Owned datacentre assetsOwned fibre network24/7 Service operations
Private connectivityAutomated infrastructureSymbiotic security model
Leaders in transformationService accountabilityTrusted advisors for change
29CMDCOO - OPERATIONAL MODEL AND CUSTOMER SERVICE
ONE IOMART
A suite of the underlying tooling is being harnessed to deliver the futureproduct and service portfolio and deliver competitive advantages
Automated infrastructure provisioning
Turnkey cloud provisioning
Highly automated specialist webhosting
Devops tooling and Container Security
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CUSTOMER JOURNEY
CMDCOO - OPERATIONAL MODEL AND CUSTOMER SERVICE
Introduction of a service team to work across the business and put the
customer experience at the heart of everything we do
OperationsSales
Service
RUNBUILDPLAN
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M&A REFRESH & EVOLVING BUSINESS MODELScott CunninghamCFO
iomart.com
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14.6
33.0
13.6
61.5
1.3
FY08 to FY21 M&A - Equity Deal Value (by area)
Mass Hosting
Self Managed Infrastructure
Self Managed Infrastructure (Magento)
Cloud Managed Services
On-Premise Reseller
M&A: HISTORIC
CFO M&A RE-FRESH; EVOLVING BUSINESS MODEL; NEW KPIS
M&A Execution
21 Acquisitions completed since April 2007. Total of £124m deal consideration
Funded from cash generation / revolver loan facility
M&A focussed on recurring revenue, “sticky” customer base, existing profitability and ability to consolidate resources
M&A Integration
21 Companies consolidated into 5 main UK trading legal entities
“Lift and shifts” from 3rd party DC providers to our own datacentre estate & network
Utilisation of central support functions
M&A: Recent impact on Group organic growth
Recent acquisitions included continued consolidation of UK Self
Managed Infrastructure (Dedicated Server) businesses:
- FY18 Dediserve & Simple Servers, FY19 Bytemark and
FY20 Memset - £20m deal value / £14m acquired revenue
Value enhancing but do not add to the Group Organic growth
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20
40
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
M&A Deal Value per year by area
Mass Hosting Self Managed Infrastructure Self Managed Infrastructure (Magento)
Cloud Managed Services On-Premise Reseller
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M&A: FUTURE
CFOM&A RE-FRESH; EVOLVING BUSINESS MODEL; NEW KPIS
Despite ongoing consolidation, the UK market place remains fragmented
Future M&A to focus on acceleration of Group’s Organic growth. Recurring revenue remains an unwavering criteria
Greater focus on capability expansion in Cloud related products & services
Within next 2 years focus on UK; Europe or North America could be considered thereafter
Hosting – Public Cloud
Data Centres – Retail Colocation
Hosting – Managed Hosting/Cloud
Cloud Platforms
Data Centres – DCH-focused Wholesale
Broader-comms/IT
players
Shared Hosting Domain Names
Digital Delivery Consulting
Infastructure Services
Telecoms & Networks
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REVENUE PORTFOLIO
CFOM&A RE-FRESH; EVOLVING BUSINESS MODEL; NEW KPIS
Revenue Portfolio
Mass Hosting (Easyspace) Self Managed Infrastructure
Cloud Managed Services Non-Recurring
Cloud Managed Services
Sub-Brand: none
Professional Services Colocation & connectivity Managed Cloud Services BaaS, DRaaS, iMSS Public Cloud (Microsoft/AWS)
c. 1,400 Customers
Self Managed Infrastructure
Sub-Brand: Rapidswitch, Redstation, Dediserve, SimpleServers, Bytemark, Memset,Sonassi
Dedicated Servers Virtual Shared Servers Connectivity Magento hosting platform
c. 9,000 Customers
Non-Recurring
Sub-Brand: Cristie Data
Hardware Reselling & support Software Licences Professional services / consulting
c. 250 Customers
Domains & Mass Hosting
Sub-Brand: Easyspace & Hosting UK
Domain Names Shared Hosting Web packages
c. 70,000 Customers
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iomart Cost Base
People Cost
DC & Equipment (incl. depn)
Licences
Power
Bandwith/Connectivity
Reselling: hardware/software
Others
COST BASE: SHARED DELIVERY ASSETS
CFOM&A RE-FRESH; EVOLVING BUSINESS MODEL; NEW KPIS
SHARED DELIVERY ASSETS: Recurring revenue streams make use of the datacentres, network infrastructure plus people resources
Most recurring revenue streams will have core costs of:
• Datacentre infrastructure & staffing• Power• Connectivity• Server & storage equipment requirements
More complex managed services add greater level of 3rd
party providers (including licence costs/extra connectivity), design & build costs and 24/7 support services. Any Hybrid offering would include Public Cloud consumption costs
PEOPLE DATACENTRE CONNECTIVITY LICENCING POWER
RECURRING REVENUE
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FINANCIAL KPI
CFOM&A RE-FRESH; EVOLVING BUSINESS MODEL; NEW KPIS
TODAY MEDIUM TERM
£112m
37%
18%
17 %
> £200m
More than 30%
More than 15%
More than 15%
Speed & accuracy
depends on M&A and
timing
REVENUE
EBITDA %
PBT %
AVERAGE FREE CASH FLOW AS % OF REVENUE
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SUMMARY
iomart.com
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SUMMARY & CONCLUSIONS
STRONG PLATFORMOur infrastructure platform is proven, reliable and highly resilient with a highly skilled team capable of managing complex customer propositions
FANTASTIC CUSTOMER BASEWe have a fantastic and diverse customer base across multiple verticals from SMB to corporate, with multiple case studies, proving our ability to deliver
FINANCIAL STRENGTHStrong and predictable financial model, +90% recurring revenues and good cash generation to invest in future growth
SIGNIFICANT MARKET OPPORTUNITYWe have substantial headroom and clear customer demand to grow our propositions in hybrid cloud, security and other markets
CLEAR GROWTH STRATEGYWe have the capabilities, customers and clear strategic route-map in place for future growth, capitalising on our core strength with adjacent solutions, M&A and new geographies
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THANKYOUAny Questions?