iOCO lifts profit 39% as it targets acquisitions

JSE-listed technology services group iOCO experienced a 39% increase in profit after tax, reaching R357 million for the year ended 31 July. This growth was fueled by improved margins and reduced finance costs, while revenue rose 3% on a constant currency basis to R5.73 billion. Adjusted EBITDA grew by 21% to R624 million, and EBITDA itself increased by 18% to R610 million.

The EBITDA margin improved to 11%, up from 9% the previous year. Headline and net earnings per share both increased by 42%, from 40 cents to 57 cents. IT services, the largest segment, saw a 4% revenue growth. iOCO's CEO Rhys Summerton believes their turnaround strategy is paying off, as the business units are taking more responsibility and investments are being made intentionally for growth.

The company is now focusing on strategic acquisitions to expand its technology services and software capabilities, aiming to grow market share and deliver long-term value. During the year, iOCO allocated capital to share repurchases and completed two acquisitions: MySky Group of Companies, specializing in network and IT infrastructure management, and Astraia Technology, providing cloud-based software for finance and procurement.

These acquisitions enhance iOCO's offerings in networking, IT management, and business software, targeting large enterprise customers. Recurring revenue from ongoing contracts, such as managed services, now accounts for over 60% of group revenue, providing greater visibility into future cash flows and a more predictable revenue base.

Group CFO Ashona Kooblall states that the results are outstanding, giving the company increased confidence for future growth. The focus moving forward will be on maintaining strong cash generation, pursuing strategic acquisitions, and delivering sustainable long-term value for shareholders. iOCO expects EBITDA to reach at least R680 million in the 2027 financial year.

The company also prioritizes improving cash generation and conversion, maintaining recurring revenue above 60%, and continuing disciplined capital allocation across organic investments, acquisitions, balance sheet optimization, and shareholder returns.