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CloudCoCo looks back on ‘pivotal’ year
Firm looking to the future after offloading its MSP business and bolstering its cash position
A trawl through recent coverage of channel player CloudCoCo reveals a tale of review and asset disposal, as the business looks to set itself on a profitable future course.
When the business shared its H1 numbers last June, it indicated it was reviewing the business as it looked to ensure it was financially secure in the long run, and it then hit the headlines again in October, after it sold off its MSP business to Aspire.
That last action fell outside the fiscal year, which ended on 30 September, and has not been included in the full-year numbers the firm has issued this morning.
The financial year results indicate a 6% improvement in revenue, coming in at £27.5m, of which 27% was generated by the firm’s ecommerce sales channels.
Ecommerce revenues doubled to £7.4m (FY23: £3.7m), fuelled by increased demand for hardware and IT gaming products. Gross profit declined by 10% to £7.6m from £8.4m.
Following the end of the period, CloudCoCo Limited and CloudCoCo Connect Limited were sold on 31 October, for an initial £7.75m that put the business in a position to repay its £6.2m MXC loan.
That has left CloudCoCo as a smaller business that is exploring areas for expansion, particularly in consultancy and investment, to broaden the revenue base and improve its profitability position.
Transformative journey
Simon Duckworth, chairman of CloudCoCo, used words like “pivotal” and “transformative” to describe the journey the business had been on during the past fiscal year and the decisions it had made at the end of October.
“2024 marked a pivotal year in our company’s evolution,” he said. “The decision to sell a significant portion of our trading assets was necessary to repay the loan notes, but also value-enhancing for our shareholders. Since the sale, we’ve seen promising growth in the trading business, led by Peter Nailer.
“While the current business is both viable and growing, it is not yet sufficient to fully support the associated plc costs,” said Duckworth. “We continue to look for new opportunities, particularly in consultancy and investment, to create a broader, scalable platform for long-term growth.”
Managed services sale
In the statement accompanying the results, Duckworth went into more detail about the decision to sell off its managed services operation.
“The sale of our IT managed services businesses, which completed post year end, was a carefully considered decision,” he said. “While we recognised the potential to grow these divisions, the Managed IT Services sector faced mounting challenges, including rising energy costs, downward pricing pressures and increasing customer churn.
“Additionally, the trend of customers leaving datacentres due to escalating hosting costs further highlighted structural challenges for our business model,” said Duckworth.
“While the sale marked the end of an era, it also paved the way for a more focused and scalable growth strategy centred on our ecommerce platform and IT product reseller business,” he added. “This decision reflects our unwavering commitment to delivering long-term shareholder value and ensures the group is well-positioned to navigate the rapidly evolving technological landscape.”
Looking ahead, Duckworth said the firm was now in a leaner and more profitable position, and was actively exploring areas where it could expand the business.
“Despite the broader economic challenges, we are confident in our ability to navigate the evolving market dynamics and achieve our strategic objectives,” he said. “We are building a stronger, more resilient business positioned for long-term success.”
