Sophos Group plc Interim results for the six-month period-ended 30 September 2019
"Our performance in H1 FY20 shows the continued progress we are making towards fully transitioning our business to next-generation cybersecurity.
Revenue growth of 8% and Billings growth of 9% at constant currency ("CC") year-on-year ("YOY");
Progress in next-gen transition and growth in Sophos Central
OXFORD, United Kingdom, Nov. 06, 2019 (GLOBE NEWSWIRE) -- Sophos Group plc (the "Group" / LSE: SOPH), a leading provider of next-generation cloud-enabled enduser and network cybersecurity solutions, today issues its interim results for the six-months to 30 September 2019 ("H1 FY20").
Financial highlights
- Reported Group revenue of $365.8 million grew 5% YOY (+8% CC)
- Subscription revenue remained the principal driver of YOY growth, increasing by 8% (+11% CC), and offsetting an 8% reduction in revenue from hardware (-5% CC) - Reported Group billings(1) of $372.0 million increased by 5% YOY (+9% CC)
- Next-gen(2) billings grew 40% CC to $208.6 million (H1 FY19: $148.6 million); Sophos Central grew 47% CC to $134.8 million (H1 FY19: $92.0 million)
- Group net renewal rate improved to 121% (H1 FY19: 118%)
- Enduser billings (+14% CC) benefited from cross-sell and recent product launches
- Growth in Network subscription billings (+8% CC) was partially offset by a decline in hardware (-5% CC)
- Annual-recurring revenue ("ARR"(3)) from MSP(4) grew by 79% at CC to $32.5 million (H1 FY19: $18.1 million)
- New customer billings (+6% CC) benefited from MSP, closing with 409K total customers (FY19: 382K) - Loss before tax of $1.5 million (H1 FY19: profit before tax of $26.0 million)
- Reflects combination of the negative impact from exceptional restructuring and legal costs in the current period versus an exceptional credit which benefited the prior-year comparator
- Adjusted operating profit(5) was broadly flat at $49.4 million, reflecting further planned investment
- Cash EBITDA(6) increased by 24%, from $54.0 million to $66.8 million, with the rate of growth benefiting from the introduction of IFRS 16 - Leases ("IFRS 16") (+10% pre IFRS 16) - Net cash flow from operating activities increased by 15% YOY to $93.8 million
- Helped by the expected phasing of some costs toward the second-half of the year and the introduction of IFRS 16 (+6% pre IFRS 16)
Financial summary
H1 FY20 |
H1 FY19 |
Growth |
Growth pre-IFRS 16(7) |
|
| $M | $M | % | % | |
| Statutory measures | ||||
| Revenue | 365.8 | 349.5 | 5 | 5 |
| (Loss) / Profit before tax | (1.5) | 26.0 | (106) | (103) |
| Net cash flow from operating activities | 93.8 | 81.5 | 15 | 6 |
| Alternative performance measures | ||||
| Billings | 372.0 | 352.7 | 5 | 5 |
| Cash EBITDA | 66.8 | 54.0 | 24 | 10 |
| Adjusted operating profit | 49.4 | 49.9 | (1) | (2) |
| Unlevered free cash flow(8) | 90.4 | 71.6 | 26 | 16 |
Note: On 14 October 2019, the Group announced a recommended cash offer of US$7.40 per Sophos Share from Surf Buyer Limited, a company owned by funds managed and/or advised by Thoma Bravo LLC. The details of the offer are set out in the announcement, which is available at investors.sophos.com. Consequently, as indicated at the time of the announcement, no interim dividend is proposed.
Chief Executive Officer, Kris Hagerman, commented:
"Our performance in H1 FY20 shows the continued progress we are making towards fully transitioning our business to next-generation cybersecurity. As we pursue this strategy, we are benefiting from our advanced capabilities and investments in the cloud, machine-learning, APIs, synchronized security, automation, managed threat response and more, to deliver enterprise-grade protection to organisations of any size."
For the full report, please go to Sophos’ Investor page on Sophos.com.
About
As a worldwide leader in next-generation cybersecurity, Sophos protects over 409,000 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 53,000 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 |
End Notes
1. 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.
2. 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.
3. 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.
4. MSP Billings exclude Reflexion.
5. Adjusted Operating Profit represents the Group's operating profit / (loss) adjusted for amortisation charges, share option charges and exceptional items.
6. 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.
7. Growth adjusted to eliminate the impact of IFRS 16 - Leases in the current period; see note 2 of the Financial Statements for further details.
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.
