Trading statement for the quarter-ended 30 June 2017
July 27 2017 - 9:00AM
Sophos Group plc (the “Group”) (LSE:SOPH), a leading provider of
cloud enabled enduser and network security solutions, today issues
its trading update for the first quarter ended 30 June 2017.
Financial and operational highlights
- Q1 billings1 increased by 16% (+19% at constant currency),
reflecting continued strong momentum despite a demanding prior-year
comparative
- Continued strong performance in enduser security, with billings
growth in excess of 30%
- Intercept X, our next-generation endpoint solution, and Sophos
Central cloud management platform both showed continued strong
momentum in the quarter
- High single-digit growth in network security, reflecting a
temporary shift in our go to market effort to appropriately respond
to the surge in customer interest in our next-generation
anti-ransomware endpoint solutions
- At constant currency, the Americas increased by over 25%, with
mid-teens billings growth in both EMEA and APJ
- Revenue increased 14% at constant currency with the
subscription component up 20%, reflecting the contribution from
prior-periods subscription billings growth now feeding into
revenue
- Adjusted operating profit2 declined to $3.4 million, reflecting
a higher proportion of subscription billings in the mix, the
majority of which are deferred and recognised as revenue in future
periods
- Continued strong cash generation in the period, with unlevered
free cash flow3 of $30.3 million
- Reaffirm outlook for FY18:
- Mid to high-teens billings growth
- 50-100 bps improvement in Cash EBITDA4 margin
- Free cash flow broadly unchanged, from a high FY17 base
Financial highlights
|
Q1 FY18 |
|
Q1 FY17 |
|
Growth |
GAAP
measures |
$M |
|
$M |
|
% |
Revenue |
141.8 |
|
127.4 |
|
11.3 |
Operating loss |
(15.6) |
|
(4.9) |
|
218.4 |
Net cash flow from
operating activities |
30.3 |
|
29.5 |
|
2.7 |
Non GAAP measures |
|
|
|
Billings |
164.3 |
|
141.9 |
|
15.8 |
Cash EBITDA |
27.3 |
|
25.6 |
|
6.6 |
Adjusted operating
profit |
3.4 |
|
9.4 |
|
(63.8) |
Unlevered free cash
flow |
30.3 |
|
28.8 |
|
5.2 |
Kris Hagerman, Chief Executive Officer, commented:“We are
encouraged to report a first quarter financial performance ahead of
our expectations. The demand environment in cybersecurity
remained strong, particularly in the enduser segment, where we saw
continued significant customer and partner interest in our leading
next-generation anti-ransomware solutions, with awareness further
raised following recent high-profile global attacks like WannaCry
and Petya. Our core strategy continues to be differentiated
and effective: we work in partnership with our channel to
deliver innovative, simple, and highly effective cybersecurity
solutions for mid-market enterprises, synchronizing across enduser
and network security. Sophos continues to grow faster than the
overall industry and gain share. We are well-positioned to
continue our momentum and deliver against our full-year
expectations and we are pleased to reaffirm our outlook.”
AboutThe Sophos Group is a leading global provider
of cloud-enabled enduser and network security solutions, offering
organisations end-to-end protection against known and unknown IT
security threats through products that are easy to install,
configure, update and maintain. For further information
please visit: www.sophos.com. The Group has over 30 years of
experience in enterprise security and has built a portfolio of
products that protects over 260,000 organisations and over 100
million endusers in 150 countries, across a variety of
industries.
Forward-looking statementsCertain statements in
this announcement constitute “forward-looking statements”.
These forward-looking statements involve risks, uncertainties
and other factors that may cause the Group’s actual results,
performance or achievements, or industry results, to be materially
different from those projected in the forward-looking
statements. These factors include: general economic and
business conditions; changes in technology; timing or delay in
signing, commencement, implementation and performance or
programmes, or the delivery of products or services under them;
structural change in the security industry; relationships with
customers; competition; and ability to attract personnel. You
are cautioned not to rely on these forward-looking statements,
which speak only as of the date of this announcement. The
Group undertakes no obligation to update or revise any
forward-looking statement to reflect any change in expectations or
any change in events, conditions or circumstances.
Contact
Sophos Group
plcTel: +44 (0) 1235 559 933Kris Hagerman, Chief Executive
OfficerNick Bray, Chief Financial OfficerDerek Brown, VP Investor
Relations |
|
Financial
Public RelationsTulchan Communications Tel: +44 (0) 20
7353 4200 |
Conference call and
webcastSophos management will host a conference call and
audio-webcast, for registered participants, at 09:30 (GMT) today.
A replay of the audio-webcast will be also accessible via the
Sophos investor website following the presentation.
To register for the webcast and access the presentation
materials please visit:
https://investors.sophos.com/events-and-presentations
Conference calls dial in details:
Telephone:+44 (0) 20 3427 1916 (UK)+1 646 254 3367
(US)Conference call confirmation code: 9489030
Participants are advised to visit the website at least 15
minutes prior to the commencement of the call in order to register
and, for those accessing the webcast, in order to download and
install any audio software that may be required.
NB: Conference call participants will be able
to ask questions during the Q&A session, but those on the
webcast will be in a listen-only mode.
- Billings represents the value of products and services invoiced
to customers after receiving a purchase order from the customer and
delivering products and services to them, or for which there is no
right to a refund. Billings does not equate to statutory
revenue.
- Adjusted operating profit represents the Group’s operating
profit / (loss) adjusted for amortisation charges, share option
charges and exceptional items.
- Unlevered free cash flow represents Cash EBITDA less purchases
of property, plant and equipment and intangibles, plus cash flows
in relation to changes in working capital and taxation.
- Cash earnings before interest, taxation, depreciation and
amortisation (“Cash EBITDA”) is defined as the Group’s operating
profit/ (loss) adjusted for depreciation and amortisation charges,
any gain or loss on the sale of tangible and intangible assets,
share option charges, unrealised foreign exchange differences and
exceptional items, with billings replacing recognised revenue.
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