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Inabox Group in a cloud conundrum as Hostworks dampens financials

Hostworks was acquired earlier this year, and has not performed to expectations.
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Inabox shares are in the slide in morning trade

Inabox Group Ltd (ASX:IAB) shares have plunged 36% to $0.64 in the first 15 minutes of trade, following the company being re-instated after a trading halt.

The financials of the company will be heavily impacted by the Hostworks business, which is a relatively recent acquisition.

Hostworks provides managed cloud-hosting, cloud solutions and co-location services.

Inabox has outlined that the business will perform well below expectations during FY18 and will have a significant negative impact on the company's financial performance for the period.

Why Hostworks

Inabox acquired Hostworks in February 2017 to fast-track the company’s cloud strategy and expand its cloud capabilities and services, which can be cross-sold to its existing 2,000+ managed IT and wholesale customers.

This did not materialise with lower take-up than expected, and other clients transitioning away.

At the time of the acquisition, Inabox estimated that Hostworks would contribute in excess of $21.8 million in revenue, $3.5 million EBITDA and $1.2 million of net profit after tax for FY18.

Inabox now expects that Hostworks will not contribute material earnings in FY18.



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