TIDMSOPH
RNS Number : 2879F
Sophos Group Plc
12 July 2019
Sophos Group plc
Results for the quarter-ended 30 June 2019
Group revenue growth of 7% at constant currency
Next generation(1) billings(2) grew 43% at constant currency
Oxford, 12 July 2019. Sophos Group plc (the "Group" / LSE:
SOPH), a leading provider of next-generation cloud-enabled enduser
and network cybersecurity solutions, today issues its trading
update for the quarter-ended 30 June 2019 ("Q1 FY20").
Financial highlights
-- Revenue of $180.2M increased by 3% year-over-year ("YOY"), or by 7% at constant currency
- Strong subscription revenue growth of 10% at constant
currency, offsetting a reduction in hardware revenue of -11%
- MSP(3) ARR(4) now at $31.8 million, an increase of 78% YOY at
constant currency
-- Billings of $183.1M increased by 5% in the period, or by 9% at constant currency
- Next generation ("next-gen") business, including Sophos
Central and XG Firewall, grew 43% at constant currency to $100.2
million, and represented 54% of billings in the quarter
- Within next-gen business, Sophos Central billings grew 49% to $64.3 million
- Renewal rate(5) was 118% in the period, compared to 115% in
the prior-year period
- Enduser billings rose by 17% in the quarter at constant
currency, whilst Network billings grew 1% reflecting as anticipated
the phasing of new product releases, with subscription growth
offset by lower hardware billings
-- Profitability improved
- Adjusted operating profit(6) increased by 10% YOY, reflecting
revenue growth and phasing of expenses
- Reported operating profit at breakeven, compared to a profit
of $6.2 million in the prior-year; primarily impacted by a one-off
exceptional restructuring charge
- Cash EBITDA(7) of $26.6 million increased by 31% YOY
reflecting in equal proportions the strength of billings and the
impact of IFRS 16 in the quarter
-- Cash flow continued to be strong in the quarter
- Net cash flow from operating activities of $54.4 million,
compared to $40.4 million in the prior-year period, the improvement
principally reflecting timing differences on working capital; with
unlevered free cash flow(8) at $55.6 million, compared to $39.6
million in the prior-year period
-- Total customers now exceed 397,000 when including MSP customers (Q1 FY19: 341,000)
Financial summary
Q1 FY20 Q1 FY19 Growth
$M $M %
Statutory measures
Revenue 180.2 175.5 2.7
Profit / (Loss) before
taxation (4.0) 7.3 nm
Net cash flow from operating
activities 54.4 40.4 34.7
Alternative performance
measures
Billings 183.1 174.9 4.7
Cash EBITDA 26.6 20.3 31.0
Adjusted operating profit 24.1 21.9 10.0
Unlevered free cash flow(8) 55.6 39.6 40.4
Chief Executive Officer, Kris Hagerman, commented:
"This has been an encouraging start to the year which underpins
our confidence in our prospects for the full year. The demand
environment continues to be strong, and as we noted at the
full-year, we believe we have a highly effective and differentiated
next-generation security product portfolio that positions Sophos
very well. Along with encouraging overall company growth, we saw
significant continued growth in our next-generation products,
including Sophos Central, Intercept X endpoint, XG Firewall, and
our MSP business. Consequently, we believe we are well positioned
for continued future growth."
IFRS 16
The results for Q1 FY19 reflect the adoption of IFRS 16
"Leasing". The impact is consistent with the expected impact
disclosed in the Annual Report and Accounts for the year-ended 31
March 2019; though the Directors will continue to monitor industry
practice and experience of implementation through the coming months
and update their assessment of the impact on the Group if
required.
About
As a worldwide leader in next-generation cybersecurity, Sophos
protects nearly 400,000 organizations of all sizes in more than 150
countries from today's most advanced cyberthreats. Powered by
SophosLabs - a global threat intelligence and data science team -
Sophos' cloud-native and AI-enhanced solutions secure endpoints
(laptops, servers and mobile devices) and networks against evolving
cybercriminal tactics and techniques, including automated and
active-adversary breaches, ransomware, malware, exploits, data
exfiltration, phishing, and more. The award-winning Sophos Central
cloud-based platform integrates Sophos' entire portfolio of
best-of-breed products, from the Intercept X endpoint solution to
the XG Firewall, into a single system called Synchronized Security.
Sophos products are exclusively available through a global channel
of more than 47,000 partners and Managed Service Providers
("MSPs"). Sophos also makes its innovative commercial technologies
available to consumers via Sophos Home. The company is
headquartered in Oxford, U.K., and is publicly traded on the London
Stock Exchange under the symbol "SOPH". More information is
available at www.sophos.com.
Forward-looking statements
Certain 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 plc Financial Public Relations
Tel: +44 (0) 1235 559 933 James Macey White / Mat Low
Kris Hagerman, Chief Executive Officer Tulchan Communications
Nick Bray, Chief Financial Officer Tel: +44 (0) 20 7353 4200
Derek Brown, Vice President Investor
Relations
Conference call and webcast
Sophos management will be hosting an analyst and investor
meeting to discuss the Q1 FY20 results at 09:30 BST today. Please
register your attendance at YBalman@tulchangroup.com.
This event is also accessible via conference call and
audio-webcast, for registered participants. 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
Please dial into the conference call 5-10 minutes prior to the
start time using the number/conference ID below:
Telephone:
+44 (0) 20 7192 8000 (UK) / 0800 376 7922 (toll free)
+1 631 510 7495 (US) / +1 866 966 1396 (toll free)
Conference call confirmation code: 6372316
Participants are advised to visit the website at least 15
minutes prior to the commencement of the call, to register and, for
those accessing the webcast, 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.
End Notes
1. The next-gen product portfolio consists of the Group's most
advanced products, managed in Sophos Central, notably including
Sophos Intercept X for endpoint protection and the Sophos XG
Firewall.
2. 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.
3. MSP Billings exclude Reflexion.
4. Annual Recurring Revenue is defined as the annualised
equivalent of term licenses, subscription agreements and
maintenance contracts including OEM and MSP but excluding perpetual
licenses.
5. Renewal rates are calculated by comparing the US dollar
amount of contracts renewed in a period (including instances of
cross-sell and upsell) to the US dollar amount of contracts
available for renewal in the period, where MSP business is treated
as new business and is excluded from the calculation. New business
grew 4.3% year-on-year of which term business was $1.3 million
lower and MSP business grew $3.1 million.
6. Adjusted Operating Profit represents the Group's operating
profit / (loss) adjusted for amortisation charges, share option
charges and exceptional items.
7. 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.
8. 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.
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
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