iOCO Posts 39% Profit Surge as FY 2026 Turnaround Cuts Debt

iOCO Technology Group reported a 39% surge in fiscal year 2026 profit after tax to R357 million alongside a multi-year turnaround that eliminated all loss-making units, though its share price remained muted near 52-week lows amid investor caution regarding international exposure and turnaround sustainability.

The strong financial results reflect a restructuring effort by the tech services firm. While headline profitability surged, equity markets have responded with restraint, keeping valuations depressed as investors weigh the persistence of these operational gains against historical volatility and broader macroeconomic pressures.

Revenue Growth and Margin Expansion

For the fiscal year, iOCO posted total revenue of R5.8 billion, representing a 3% increase on a constant currency basis compared to the prior period. Operational efficiency drove faster growth in profitability than top-line sales, signaling successful cost containment across core business segments.

Adjusted EBITDA improved 21% to R624 million, up from R516 million in fiscal 2025. Operating profit reached R483 million, marking a 14.8% increase year-over-year and reflecting the elimination of unprofitable legacy operations.

Debt Reduction and Balance Sheet Repair

Beyond earnings growth, the company achieved balance sheet de-leveraging over a multi-year period. Net interest-bearing debt dropped 77%, falling from R2,065 million in fiscal 2021 to R480 million in fiscal 2026.

This debt reduction transformed key credit metrics. The net debt-to-EBITDA ratio improved to 0.2x, down from 1.0x in fiscal 2025, providing the firm with greater financial flexibility.

Strategic Acquisitions and Recurring Revenue

To bolster its service offerings, iOCO completed the acquisition of MySky in July 2026. The acquired business specializes in enterprise networking and managed infrastructure.

The MySky transaction adds a recurring managed services revenue model to the group, backed by an average EBITDA margin of 17%.

What Drives Investor Hesitation?

Despite the elimination of loss-making divisions and debt reduction, market sentiment remains cautious. Investors continue to monitor the sustainability of the turnaround, particularly as the company navigates international exposure and shifting enterprise IT spending patterns across its core markets.